The European Central Bank has started developing the digital euro, one of the big projects of the organization in the coming years, which will try to compete with cryptocurrencies in technology and security. However, the process of creating the system could take until 2026.
The digital euro project aims to respond to the rapid growth of purchases and transactions on-line, and is part of the progressive cash disappearance expected across the European Union in the years to come. However, the President of the ECB Christine LagardeHe stated a few months ago that the digital euro “will never replace cash”.
The advantages of the digital euro include the Simplification of payments. Once launched, the holders of this currency will be able to have their own virtual wallets to operate from. Also the use of technology Blockchain It will enable much more secure tracing of operations, a point of interest in reducing tax fraud and the informal economy.
In this sense, the progressive disappearance of money in cash and the foreseeable growth of the digital euro will make it possible to put an end to the well-known “with VAT or without VAT?”. According to a study carried out in Italy, the state could collect up to an additional 30,000 million euros annually for this tax. In addition, the digital euro will enable implementation Currency exchange and international transactions much faster and cheap, a fundamental aspect for the full growth of e-commerce that can be very useful for European companies.
The digital euro is currently being tested, including in Spain. Santander, BBVA, Sabadell, CaixaBank and Bankia are the five entities responsible for testing the system, led by Iberpay, the company that launched the Bizum tool with great success. Although testing should have started in August, it finally started in September. A small delay that shouldn’t eliminate a transition that’s here to stay.
Does the digital euro want to compete with cryptocurrencies?
The creation of the digital euro seeks more than just to compete, to put the European currency at the forefront of technology that cryptocurrencies have pioneered for years. In addition, it is difficult for them to compete with each other since their basic concepts are different.
While the digital euro will continue to depend on a central bank and specific monetary policy, cryptocurrencies are decentralized assets whose value depends on nothing other than current supply and demand.
In addition, the development of the digital euro also responds to an interest in to emulate the initiatives taken in Russia or China, which has already created its own digital currencies, always pegged to the country’s official currency, the ruble and the yuan.