The digital Euro is coming

It seems that the digital Euro might be soon a reality. An experimental form of it might arrive already until the end of the 2021. But let’s discover together what this digital currency is, how it will work and which benefits it will bring.

The digital currency in the world

Europa is going to present its own personal digital currency, but it does it as an answer to the China, which is a step forward about it.

The China, infact, already started a program of experimentation in four different cities. The currency is the digital renminbi.

As consequence of it both Europe and United States of America started to work on their currencies, by looking for a digitalization as quick as possible.

The news that arrive from the Unites States let us know that on the other side of the ocean they are trying to start the experimentantions until the end of the year. Jerome Powell, President of the Federal Reserve, says that “for the digital dollar we might need some kind of authorization by the congress of the central bank before to proceed with the development and the launch of a digital version of the green ticket”.

The digital Euro

But let’s now come back to the old continent. Even if from the central bank arrive promises about a upcoming experimentation, actually the digital Euro is still only an idea. But what’s this digital currency? How can we understand what it is?

To explain it is Silvia Attanasio, responsible of the Innovation Office of the Italian Bank Association: “Its characteristics can be deducted from the report that the European Central Bank published and proposed for consultation in october of the last year.

It will be a currency emits from the Bce, very different from the so called cryptocurrencies and it will side the cash. In december, as Abi, we started a project of experimentation of the digital euro. The italian banks developed in the years a strong competence, with a very efficient technological infrastructure that had, in october of the 2020, about hundred banks involved in the project Spunta Banca Dlt (Distributed ledger technology).

The blockchain of the bank world, which is fully operative, can be make available for the Bce. Specifically, we are realizing simplified versions of fields where to use the digital euro in the most useful shapes for citizens and companies. And the first tests can start from the next spring”.

The digital Euro is different than the cryptocurrencies

The digital Euro isn’t a cryptocurrency. It is a real currency and, for that, it considers the normal criteria that define the value and the inflation. But it is even wrong to say that it’s a real currency, because actually it doesn’t exist.

There isn’t any piece of paper printed by the Bce, nothing to put in the pocket. However it’s like it’s real.

Digital money but without bank account

So it isn’t a real money, it isn’t a cryptocurrency, but it isn’t something to make online payments through credit or debit card neither. As much as that to use the digital euro we don’t need a bank account.

It is an electronic bank note that will work exactly as the cash.

“The digital Euro will have the characteristics of the cash. It will be available for all the citizens, with a bank account or not, and it will be used with an application downloadable on the mobile phone or through an electronic pocket of our own service card.

There are many hypothesis, and those aren’t mutually exclusive. The bank won’t be fully excluded. It will share the duties, with all the custody and administrative services that will be made by the private credit institutes”, explains Luca Fantacci, co-director of the Reserach Unity for Currency innovation of the Bocconi.

Many advantages but even some risks

The digital Euro might bring many advantages to the families and to the companies, especially because with it we will have a direct link with the Bce. Without need to talk with someone else, for example, for the bonus and the benefits that will arrive straight on the pocket of the citizens.

On the other side we risk an excessive usage of the digital currency, by reducing the real deposits to the Bce, which absolutely need them to give loans to families and companies.

But it’s still too early to predict future scenarios. We will see how the experimentations will go and then, maybe, we will have a clearer state of play.

This post is also available in: Italiano