Several countries have begun preparations to establish digital currencies backed by their central banks (CBDC). In July, the European Central Bank’s (ECB) governing council began the inquiry phase of a digital euro initiative.
The digital euro project’s investigation phase is expected to last 24 months. The design will be based on user preferences as well as merchant and intermediary technical recommendations.
“We will engage with the European Parliament and other European decision-makers and inform them regularly about our findings. Citizens, merchants and the payments industry will also be involved,” Fabio Panetta, ECB Board Member and Chair of the High-Level Task Force on a Digital Euro stated.
“Our work strives to ensure that citizens and enterprises continue to have access to the safest form of money, central bank money,” said ECB President Christine Lagarde.
A digital euro must suit Europeans’ requirements while also preventing financial instability and criminal activity. This does not rule out the possibility of issuing a digital euro in the future. In the 19 countries that make up the Eurozone, the digital euro is meant to supplement, not replace, currency.
Nexi has joined the CBDC initiative
Nexi, an Italian payment firm, is one of Europe’s largest payment providers, and it is collaborating with the European Central Bank to develop a digital euro.
Nexi manages 41.3 million payment cards and approximately 2.7 billion transactions each year for other banks. In addition, merchants and digital financial companies can also use their services. According to Nexi, central bank digital currencies, like stablecoins, could be essential for the future of payments.
In an interview at the Money 20/20 conference, Nexi’s CEO, Paolo Bertoluzzo, said.
“We are engaging with the European Central Bank and contributing to the design of the future digital euro because we believe that can be a positive force in the evolution of digital payments,”
Bertoluzzo remarked in a statement on the nature of the collaboration,
“We are starting to talk about a new version of cash. That’s the way they think about it”.
On the other hand, Panetta suggested that, despite the benefits, the potential hazards linked with CBDC be considered.