ECB Moves to Start Digital Euro Project

The European Central Bank (ECB) said it will move from discussion to exploration in its plans to develop a digital euro.

The ECB decided to start the investigation phase of a eurozone central bank digital currency (CBDC), which will last 24 months, an announcement Wednesday said.
The ECB has been discussing the potential launch of a CBDC for the 19 euro countries since the beginning of this year. ECB President Christine Lagarde said in March that one could be launched within four years.
"We will commit the resources necessary to design a marketable product," ECB board member Fabio Panetta said in a blog post on Wednesday. "But a decision about whether or not to issue a digital euro will only come at a later stage. And in any event, a digital euro would complement cash, not replace it."
Research by the central bank last year highlighted a drop in the use of cash since 2019, with the COVID-19 pandemic accelerating in the long-term decline.
The ECB said prior experimentation suggested that an architecture "combining centralized and decentralized elements are possible."
The move from discussion to exploration of a CBDC is one that numerous other central banks including those of the U.K. and Japan have made in the past year.
Among major economies, China leads the way in CBDC plans, while South Korea and Sweden both appear to have moved from exploration to testing in recent months.

The ECB has been discussing the potential launch of a eurozone central bank digital currency since the beginning of the year.