This is an interesting topic for me and I am very interested in when you could expect the euro in your digital wallet?
The European Central Bank will also launch a public debate on when and how it could create a digital euro. The move comes at a time when the pandemic is accelerating and cash is being pushed out of use, and at the same time, regulators are nervously monitoring the rise of cryptocurrencies such as bitcoin.
And what would the digital euro mean for the citizens of the region.
What is the digital euro?
The digital or virtual euro would be an electronic version of euro banknotes and coins, would be a legal tender and would be guaranteed by the European Central Bank.
It would also, for the first time, allow individuals to have deposits directly with the ECB. This could be safer than with commercial banks that could fail or from holding cash that could be stolen or lost.
And like cash, money can be kept outside the banking system, for example in a "digital wallet".
It would enable citizens and companies to make daily payments "in a fast, easy and secure way", the ECB announced. The digital euro would "replenish cash, not replace it", the ECB emphasized.
The issuance and transfer of digital banknotes could be done using a technology known as blockchain on which cryptocurrencies like bitcoin rely.
Why now?
The Covid-19 pandemic has boosted electronic payments as customers avoid banknotes and coins for fear of spreading the coronavirus. Like other central banks around the world, the ECB is also cautious when it comes to virtual money. If people in the eurozone switched en masse to virtual currencies that operate outside the reach of the ECB, this could hamper the effectiveness of its monetary policy measures. Facebook's plan "accelerated the thinking of central banks" on that topic.
What are the risks?
People could avoid traditional bills in favor of going into the digital market, weakening banks in the eurozone. The risk would be higher in times of crisis, when savers could be tempted to escape the security of the "digital euro" and start a race on traditional banks.
To avoid this, the ECB could propose a limit on the number of coins that any citizen could own or exchange.
Concerns about privacy and ensuring that the "digital euro" cannot be used for money laundering will also be part of the ECB's thinking, as it weighs the pros and cons in the coming months.
And what is the situation now?
Private digital currencies are extremely volatile. The price of bitcoin halved from the highest levels at the end of 2017 of around 20,000 dollars (17,030 euros).
But in recent years, central banks have begun to look for their own virtual money - known as the Central Bank's Digital Currency (CBDC) - as a stable and alternative. The Central Bank of China began digital currency-related trials in four cities in April, and the Bank of France also began experiments.
On Friday, the Bank of Japan said it would step up research on the subject. In January, the Bank for International Settlements announced the creation of a working group dedicated to that issue.
When can I expect a digital euro in my wallet?
The ECB will begin quarterly consultations on Monday and will conduct a series of experiments on the feasibility of the digital euro over the next six months.
The central bank aims to decide all about it around mid-2021 and whether to launch the project or not. But don't expect a digital euro in your e-wallet any time soon.
In my opinion, it will take "between 18 months and three or four years" for the initiative to come to life, said a source close to the project for AFP.
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