Projection: EU and UK announce a new timeframe for digital euro and digital pound
February 15, 2023
The last decade has seen unprecedented changes in the payments landscape, including the rise of digital currency.
As a result, governments are now looking to launch their own digital currencies as a way of anticipating any private sectors grabbing a hold of the market.
In the UK, both the Treasury and the Bank of England recently announced an optimistic deadline for launch for a digital pound central bank digital currency (CBDC).
The hope is that CBDC is able to replace paper money and coins by 2030 and “fend off a Big Tech competitor”
Those consumers who are already familiar with digital currencies and wallets might see little change in the handling. The difference would be in both the backing of the central bank and the guarantee of availability for everyone.
The reason for the creation of a digital pound is simple; officials believe it will ensure the BoE maintains control of the “heart” of the UK financial system, preventing private payment companies to take control with a closed network, as the objective of both institutions is that the general public is able to access safe, easy to use money in the “digital age”.
“Trusted” and “accessible” are the key words, and Chancellor Jeremy Hunt is hoping the CBDC is just that.
Consultations will formally begin this week, headed by both the Bank of England and The Treasury.
Not only does this apply to the UK – Europe at large is also looking at a promising deadline for their own digital euro.
According to the advisor to the European Central Bank, Jürgen Schaaf, a possible date for the issuance of a digital euro is as soon as 2027.
This digital euro is in its phase of investigation, and the results of said investigations could be available as early as this coming spring, and by autumn, it will be decided whether they move forward with the realization phase.
Many more countries are looking to launch their very own CBDCs – as many as 114 are currently exploring them, however, only 11 countries have successfully launched them. 18 of the G20 countries are in advanced stages of their development.
While CBDCs are growing more and more popular, there is a reason their adoption has been so slow – and that is the as yet unseen impact they might have on the financial structure of any given country.
According to Mr. Shaaf, customer deposits are the main financing source for banks in Europe, and creating a CBDC that is too attractive could potentially change the dynamic completely.
Want to learn more? Check out Payments Cards and Mobile’s full write-up here.
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