ECB officials move to ‘preparation phase’ for digital euro.

The (European Central Bank)ECB officials move to its digital euro project to a preparation phase, marking a significant step towards the potential issuance of a central bank digital currency (CBDC) in the European Union. The move comes as the ECB faces growing criticism and concerns over privacy issues surrounding its plans.

The preparation phase, which is set to begin in November and last for two years, aims to finalize a digital euro rulebook, select providers to develop a CBDC platform, and conduct further testing. However, the ECB emphasized that the move does not represent a decision to issue a digital euro, as the bank will only consider such a decision once the relevant EU legislation has been completed.

The decision to enter the preparation phase has sparked mixed reactions. Some critics argue that it may be premature, as the ECB has not effectively communicated the added value of a digital euro. Markus Ferber, a member of the European Parliament’s economic affairs committee and a skeptic of CBDCs, suggested that the ECB should have waited until the legislative process was concluded to proceed with the preparation phase. He raised the possibility that the proposed legal framework could undergo significant changes, rendering the ECB’s preparations obsolete.

Nonetheless, Ferber acknowledged that the two-year phase could offer an opportunity for the ECB to refine the digital euro to fulfill its promises as a digital currency. The ECB’s outgoing Executive Board Member, Fabio Panetta, also emphasized that the move does not pre-empt a decision or prejudge the legislative process but rather allows for the exploration of potential issuance and roll-out options.

According to a report accompanying the announcement, the ECB envisions a digital euro that would be easily accessible to citizens and businesses through supervised intermediaries like banks. This design aims to ensure widespread adoption and usability of the CBDC.

As the ECB enters the preparation phase for its digital euro project, the future of a CBDC in the European Union remains uncertain. The completion of EU legislative procedures will be a critical factor in determining whether the ECB moves forward with the issuance and implementation of a digital euro.