The European Central Bank (ECB) says that it’s potentially looking to release a digital version of the euro fiat currency. The firm is about to hold a two-day annual forum, where plans and structural ideas revolving around the currency will be introduced to the world.
The ECB Is Moving Forward with a Digital Euro
We are consistently hearing about the world’s banks looking to digitize fiat currencies. China has already done so and is now preparing to release a digital version of the yuan, while the United States Federal Reserve has also commented that it’s potentially looking into the prospects of a digitized dollar.
The ECB annual event is going to be attended virtually by several of the world’s leading financial experts including Jerome Powell of the Fed and Andrew Bailey, the governor of the Bank of England. Digitization is going to be one of the primary subjects brought up in the meeting. Naturally, many want to know how the progress is going for centralized and bank-issued digital currencies and how they can potentially impact what banks do business in the future.
Richard Paulsen – chief executive of Arcane Media and Research in Oslo, Norway – commented in a recent interview:
Central bank digital currencies will be a net positive for bitcoin… The structure of a CBDC, in the retail markets, will most definitely be in the form of a token. This also means that for it to work as a payment method, payments solutions must be changed from today’s analogue world to a truly digital one. This will make it much easier for e-commerce to switch between CBDCs and bitcoin on each individual transaction.
While it can be argued that CBDCs – or central bank digital currencies – are suddenly a hot topic, the ideals behind them are a little off when compared to the initial notions behind bitcoin and other mainstream cryptocurrencies. These assets are designed to take power out of the banks and put it in the hands of consumers and individual customers. Those who cannot gain access to centralized tools and products that banks typically offer can be financed via cryptocurrencies.
Thus, the idea that these currencies will now be owned, issued and controlled by banks goes against the ideologies that first brought crypto to the market. Still, CBDCs have grown in popularity following the introduction of the COVID pandemic, which has required many banks to intervene and potentially assist everyday citizens through further money printing.
Why CBDCs Can Work
Many are now curious to see how these assets can potentially assist in the faster dispersal of stimulus funds and similar products. Keld van Schreven – managing director and co-founder of digital asset investment firm KR1 – recently stated:
The economic devastation of COVID-19 and collapse of old systems has meant fast tracking any innovative technology that can help GDP growth and digital currencies and stable coins fit perfectly into this narrative.