Dr. Joachim Nagel, the president of Germany’s central bank, predicts that the digital euro will not be launched until 2028 or 2029. The European Central Bank has initiated a two-year preparation phase for the project, focusing on finalizing rules, selecting private-sector partners, and conducting testing and experimentation. After this phase, the Governing Council will decide whether to proceed with further preparations to potentially issue the digital euro. The exact timeline will depend on the European legislative process.
The digital euro is seen as a central bank digital currency that would be backed by a central bank, unlike cryptocurrencies. The ECB aims to improve the capabilities and accessibility of central bank money through the digital euro. Nagel highlighted the benefits of a European payment method, including security, convenience, speed, reliability, and acceptance across the eurozone. The digital euro could facilitate various transactions from online purchases to in-store transactions and payments to public authorities.
Currently, German bank cards may not work in other euro area nations, and the digital euro aims to address this issue. Most people would likely use their existing online banking app or a digital euro app on their smartphone for transactions. Critics of the digital euro raise concerns about potential impacts on banks and privacy, while others question whether it will be significantly better than existing payment options. The ECB asserts that a digital euro would increase competition in payments, particularly against dominant American companies.
To address concerns about reducing money held by banks, the ECB plans to establish limits on how much each individual can hold in a digital euro, likely around 3,000 euros. Despite doubts and opposition, the ECB remains committed to the digital euro project. The Governing Council will need to make a decision following the two-year preparation phase and the completion of the European legislative process. The digital euro aims to enhance payment capabilities in the eurozone, making it a secure, convenient, and widely accepted payment method for various transactions.
