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The ECB authorities have claimed that the virtual euro will be initially introduced to pay attention to public-based applications like transactions among peers and in retail shops.
In a document, not meant for the public, several pointers on what would comprise the characteristics of the digital euro have been discussed. The document, dated September 13, is created by the Treasury Authority of France, Germany, Italy, Spain, and the Netherlands
According to the document, the virtual token/ currency should be meant to secure people’s personal information and at the same time, be environmentally safe. Moreover, another clause in the document suggests the digital euro be liable to caps on holdings.
While the discussion on the ideal European digital currency is still ripe, the European Central Bank (ECB) is presently evaluating the need and possibility of launching the currency in virtual space. A bill is expected very soon which would possess the bandwidth to make some concrete changes in the legislation of virtual currency.
The idea of Central Bank Digital Currency (CBDC) was initially proposed as a solution to reduce external, powerful giants like Facebook from seizing the state’s participation in authorizing currency with its native stablecoin, called libra which was later changed to Diem.
Some other pointers in the document suggested that digital currency should not be a substitute for cash, and always complement the private sector mode of payment like the digital money authorized by commercial banks.
The ECB authorities have claimed that the virtual euro will be initially introduced to pay attention to public-based applications like transactions among peers and in retail shops. The idea of integrating this with blockchain would only be considered if it would lead to a rapid and safe mode of payment. However, the Dutch administration, on the other hand, believes that allowing a currency to be programmed leads to anticipation of its utility. This would eventually lead to a lowering of the currency’s estimated value.
All these pressing questions need due deliberation but the European authorities are somehow beating around the bush as they become more crucial than ever. Having said that, the paper has emphasized the importance of concealing the identity of receivers and senders of the currency. According to the document, the information should not be provided to a third party (which in this case, is the central bank).
The authorities have also shown support to a recommendation by the ECB Executive Board Member Fabio Panetta, that said that the public’s acquisition of the CBDC should also be restricted. This can either be done by authorizing low-interest rates or strict caps on the assets, which would allow money to stay in the traditional banking system.