European central bankers predict that the digital euro is at least five years away

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Nobody seems to be in a rush to digitize the euro, but that could change given increasing global competition.

Several experts from various European banks agreed that even a proof of concept for a digital euro is four or five years away.

In a panel on Monday called “Upgrading Money to the Digital Age: Introducing Digital Euro,” participants agreed that the current task was primarily one of getting everyone onboard with the specifics of a digital euro, putting any real implementation well into the future. 

Central bank digital currencies, or CBDCs, have been an extremely popular topic of debate in recent years, but especially since the beginning of the COVID-19 pandemic. 

Austėja Šostakaitė of the European Central Bank said that the ECB wouldn’t even be making a decision on whether to pursue a digital euro in earnest until the middle of 2021, which contradicts an estimate of January that the ECB’s president made earlier this month. For now, Šostakaitė said, the question was “How do we introduce euro into the ecosystem and how does it collaborate with commercial bank money?”

Source: Austėja Šostakaitė’s presentation for Upgrading Money to the Digital Age

An advisor to the Swedish Riksbank, Carl Andreas Claussen said that the central bank was finishing a proof-of-concept for its e-krona in February, but likewise estimated that a true launch was “four or five years away.” Claussen said:

“There are some legal questions and this is such a big issue that we cannot decide on this. We need some political backing. We suggested to the parliament that they should have an expert committee looking at this.”

Sweden is part of the European Union but not the Eurozone, meaning that it retains its own currency. Internally, cash usage in Sweden is among the lowest in the world, meaning that the country has something of a jump on digitizing currency. Interesting to note is that Claussen also alluded to ambitions for cross-border applications, very few of which happen in the krona given the relative utility of the euro or dollar. 

Regarding the euro itself, Šostakaitė suggested that outside competition may speed up the existing timeline for development. “If we see foreign CBDCs, or maybe Facebook coming into the Eurozone, that may accelerate things,” she said.

Facebook’s Libra, for its part, seems on track to launch as a dollar-pegged stablecoin in January.

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