ECB allowed the possibility of issuing the digital euro by 2026
Testing of the national cryptocurrency in EU countries will start in 2023
17.05.2022 - 11:10
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What’s new? The European Central Bank (ECB) may start developing and testing the digital euro as early as 2023. According to Fabio Panetta, a member of the ECB’s executive committee, this phase will take the regulator up to three years. He also noted that the successful implementation of a central bank digital currency (CBDC) could be facilitated by its recognition as legal tender and use in P2P payments.
What else did Panetta add? The ECB spokesperson also commented on the recent collapse of the TerraUSD (UST) stablecoin and its backing LUNA token.
“Recent developments in the market for crypto-assets illustrate that it is an illusion to believe that private instruments can act as money when they cannot be converted at par into public money at all times,” Panetta stated.
Despite claims that digital assets are “a trustworthy form of currency free from public control,” in most cases they pose investment risks and are speculative in nature, the ECB executive board member explained.
What happened before? The European Commission was considering the option of imposing tight restrictions on the use of stablecoins. Regulators may be given the power to require issuers to stop issuing new coins if their volume exceeds 200 million EUR and 1 million transactions per day. If these figures fall, the issuance may be allowed again.
In April 2022, Panetta called cryptocurrencies a threat to the global economy and called for stricter regulation in this area. In his view, crypto assets should only be used “within clear, regulated boundaries” and for purposes that benefit society.
The ECB also called the anonymity of the digital euro an undesirable development option. The regulator specified that intermediary banks would receive all information about transactions with the state-owned cryptocurrency.
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