The digital euro and other CBDCs continue with their development initiatives, which could become a reality in the coming years.
Situation of CBDCs in Spain
Since 2020 (the year in which it established a working group to analyze the pros and cons of introducing a CBDC in the euro zone), the BdE and the ECB have been actively working on the exploration and development of the digital euro, studying its fits within the national socioeconomic context, keeping in mind that The main objective of the digital euro is none other than to modernize the financial system, improve the efficiency of payments and guarantee monetary sovereignty in the digital era that we find ourselves in.. Since then, the BdE has publicly shown its interest in the underlying technologies of CBDCs (blockchain, DLT, etc.), participating in different studies and pilot tests.
Not only the EU is immersed in the issuance of a CBDC, since ≈90% of the world’s central banks are exploring their own digital currency project (there are already around 130 countries, which represent 97% of global GDP). CBDCs have caught the attention of central banks for several reasons: they improve financial inclusion while reinforcing monetary sovereignty and payment efficiency.
The digital euro: A substitute for physical money?
The digital euro is designed to complement, not replace, physical money. Although it could reduce dependence on cash, especially in small payments and daily transactions (online and offline), it is not expected to eliminate it completely.
The ECB has emphasized that Cash will continue to be available, as it is crucial for financial inclusion and ensuring the resilience of payment systems.. The digital euro is being designed to be a public, free and accessible means of payment for all European citizens.
All of this, with the aim of constituting a key piece to modernize the European financial system and strengthen its independence compared to other alternatives for private payment solutions, guaranteeing European monetary sovereignty in an increasingly digitalized world.
The ECB is in the middle of developing the digital euro after evaluating different technologies and legal and regulatory frameworks. One of the main challenges is to guarantee the privacy of users without compromising the ability to prevent illicit activities. In addition, aspects such as accessibility, usability and interoperability with existing payment systems have been considered. The gradual adoption of the digital euro could begin in the coming years, depending on the results of current tests. Although there are still details to be resolved, regulators will ensure that the digital euro is an effective and secure tool.
The adoption of the digital euro entails adapting current channels to the operation of the digital euro, modifying points of sale, modifying regulatory reports, etc. Operationally, what seems most logical is to reuse, as far as possible, the currently existing payment infrastructures, standards and components (including interoperability between CBDCs), which undoubtedly reduces uncertainty.
What role will the financial sector have?
The implementation of CBDCs already represents a major transformation of the global payments ecosystem and, in this regard, the financial sector is no stranger to it; Its role would continue to be key for the distribution and provision of services related to digital currencywith the current financial intermediaries being the ones who continue with the contractual relationship related to the management of end users’ accounts.
Additionally, the digital euro will allow players new rails on which to develop payment solutions accessible throughout the euro zonewhich could favor innovation and competition in digital payments in Europe.
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