According to a recently released report, the European Central Bank (ECB) has completed prototypes for a digital euro, leading the way toward an imminent decision on its development as a new type of the European Union’s official currency.
The ECB recognizes the potential of a central bank digital currency (CBDC) to promote innovation. However, it expresses concerns about the use of Web3-style distributed ledger technology and smart contracts.
ECB Executive Board member Fabio Panetta, in a letter to the European Parliament’s Irene Tinagli, stated, “This exercise reveals that it is possible to seamlessly integrate the digital euro design choices into the existing payment landscape while also allowing for a wide variety of innovative features and technologies.”
The digital euro was initially proposed as a potential response to Facebook’s Libra (now called Diem) currency, but it has faced controversy during its prototype stage due to its connection with Amazon, a prominent US technology firm.
In response to calls for the plan to be reversed, ECB Executive Board member Fabio Panetta attempted to downplay the lasting impact of Amazon’s involvement, referring to the prototypes as a “lab experiment” intended to be discarded and not used further.
The ECB’s development of a digital euro presents opportunities for innovation, but it also poses technology and partnership challenges, as evidenced by their reservations about Web3-style technology and the debate over Amazon’s involvement.
Article compiled by Coinbold
