The European Central Bank (ECB) has begun the Digital Euro Preparatory Phase, marking an important step in the development of a centralized digital currency for the 19 European Union countries that use the euro currency. The move comes after two years of research into the acceptability of the digital euro, which is expected to offer a safe and reliable digital payment alternative.
The ECB initiative will study operational details such as the possibility of developing a special digital euro application or its integration into the bank's existing applications. For those without access to traditional banking, physical cards can facilitate digital euro transactions to ensure inclusivity. The digital euro is intended to work online and offline and may be available to citizens or non-citizens who have an account with a European area payment service provider.
To maintain privacy, offline transactions will ensure the confidentiality of the payer and the recipient. The probability of any financial crisis scenario that may lead to a transition to Central Bank Digital Currencies (CBDCs), the ECB plans to implement a maximum balance limit for digital euro accounts, initially between €3,000 to €4,000.
This preparatory phase will last two years and involve extensive testing. This phase is expected to occur simultaneously with legislative discussions.
Dr. Wolfram Seidemann, CEO of G+D, emphasized that the digital euro will combine the benefits of cash with the convenience of digital payments without additional costs or security risks for citizens. This new era of digital finance reflects a transition that corresponds to the evolution from a barter system to a digital currency, providing user comfort in a modernized government monetary ecosystem.
