The European central bank is evidently focused on the topic of digital currencies. This morning, the Governing Council of the European Central Bank, also referred to as the Eurosystem, announced that it has begun the investigation phase of a digital euro project. Chief among its objectives appears to be the elimination of bitcoin as a potential threat, with the authority closing out its news release by throwing shade at the popular digital currency.
The investigation phase of the central bank digital currency is said to last approximately 24 months as the firm looks to address the key issues at play regarding the design and distribution of the digital currency. A focus of the phase is the elimination of illicit activity from the currency, while meeting the needs of its citizens and removing the potential for “undesirable impacts on financial stability and monetary policy.”
Most importantly, the council stated that “a digital euro would complement cash, not replace it.“
The investigation, which is stated to involve focus groups and prototyping, is said to focus on the use cases of the coin, while also examining how the several priorities can be met related to the coin, including making it accessible, even for those not connected to the internet, and ensuring its an efficient form of money.
On the latter point, the council indicated that experiments already conducted by central banks over the last nine months have outlined a system where up to 40,000 transactions can be completed per second using both centralized and decentralized elements. Most importantly, they can be conducted with environmentally friendly architectures.
The council closed out the announcement by stating, “the power used to run tens of thousands of transactions per second is negligible compared with the energy consumption of crypto-assets such as bitcoin.“
Information for this briefing was found via the ECB. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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