European Union Accelerates Plans For Digital Currency

A digital Euro could be issued by the European Union (EU) within four years, a senior official from the European Central Bank (ECB) has said.

Fabio Panetta, a member of the ECB’s Executive Board, said the timeline for the central bank digital currency (CBDC) has been pushed forward due to concerns over Russia’s invasion of Ukraine and the rise of private stablecoins such Meta Platforms (FB) now-abandoned Libra.

Peer-to-peer (P2P) payments, allowing transactions among friends, could be the first testing ground for a digital Euro before it spreads to other areas like payments in stores or online, the ECB official said.

In October 2021, the ECB launched a two-year investigation phase to look at issues like what use cases to prioritize, and no final decision has yet been taken on whether to issue a digital Euro.

In March of this year, ECB President Christine Lagarde said the sanctions following the war in Ukraine offered a reason to speed up the plans for a digital currency.

The idea of the EU issuing its own digital currency first emerged after an industry consortium led by Meta Platforms proposed its own cryptocurrency, called “Libra,” subsequently renamed “Diem” before being abandoned entirely.

But recent collapses in the cryptocurrency market, notably among stablecoins that are supposed to be pegged to the U.S. dollar, are adding more impetus to pursue a digital Euro, said Panetta.