The European Central Bank is planning to establish a blockchain payment system, which aligns with its ambitions to create a digital euro or Central Bank Digital Currency (CBDC). The Bank aims to develop this new platform as soon as possible, although it hasn’t provided a specific schedule.
The ECB has revealed a two-phase plan to implement the new blockchain payment system. Firstly, it will develop and implement a “safe and efficient” blockchain platform for money settlements linked to the existing Target settlement system. This will be followed by an evaluation phase for a “more integrated solution and long-term” to settle transactions based on Distributed Ledger Technology (DLT) in central bank money, which will also include international operations such as currency settlement.
According to Piero Cipollone, a member of the ECB Executive Committee, “We are adopting innovation without compromising security and stability.” He emphasized that the goal is to achieve a more harmonized and integrated European financial ecosystem. The project is an important contribution to improving the efficiency of the European financial market through innovation.
The Digital Euro Plan
The Central Bank of the Euro Zone has been exploring the concept of a digital euro, a digital currency of the Central Bank (CBDC) backed by the ECB and operated by private institutions such as banks. The ECB began the research phase of its CBDC in 2021 and has been reporting on its progress since then. The president of the ECB, Christine Lagarde, has widely supported the project and estimated that a launch could occur in 2025.
However, European Bank officials have indicated that they will only make a final decision on whether to launch a digital euro once European legislators approve the legislation on the matter. The European Commission proposed legislation on the digital euro in June 2023, but there hasn’t been much progress. It’s possible that Europe may accelerate its advances in CBDC due to the opposite approach taken by the incoming administration of Donald Trump, who issued an order to prohibit federal agencies from issuing a digital dollar.
Last month, Cipollone called for a digital currency backed by the ECB in response to Trump’s executive order in the United States. In a recent interview, the Board member declared that the US President’s actions will possibly accelerate legislative support for the digital euro. “The political world is becoming more alert to this,” Cipollone said. “And we may see an acceleration in the process.” A report on European CBDC legislation could arrive this summer.
Key Points
– The ECB plans to establish a blockchain payment system as part of its efforts to create a digital euro or CBDC.
– The project will be carried out in two stages, starting with the development and implementation of a “safe and efficient” blockchain platform.
– The goal is to achieve a more harmonized and integrated European financial ecosystem through innovation.
– The digital euro plan could see progress in 2025, depending on legislative approvals.
– The ECB’s efforts may be accelerated due to the US’s approach to digital currencies.
This is an informative article and should not be considered as investment advice. Investments in crypto are not regulated in some countries and may not be appropriate for retail investors. It’s essential to see your country’s laws before investing.