The European Union is pushing for a digital form of its currency for fully centralized control over its economy.
The move comes in the wake of the crash of Terra UST (UST), a stablecoin with the highest market capitalization. The crash of Terra, alongside its sister cryptocurrency, Luna, has had a massive ripple effect on the rest of the cryptocurrency space, which is reeling from the loss of billions of dollars, as reported by Fortune.
The EU’s digital euro, called the Central Bank Digital Currency (CBDC), is now being promoted by members of the European Central Bank. Reclaim The Net reports that member countries of the EU will be invited to test the digital euro in 2023.
Speaking at an event at the National College of Ireland, executive board member of the European Central Bank (ECB) Fabio Panetta said the ECB’s CBDC testing phase will begin in 2023, with the full rollout planned for 2026. Member countries will be allowed to test the Digital Euro for three years before it can be publicly used.According to Panetta, an ECB-backed digital euro, if used as legal tender in all EU member states, could boost the economy. But its rollout will not mean the end of cash, which is currently only used in 20% of transactions.“We will ensure that cash remains available. But if the current trend continues, we could face a future in which cash loses its central role and its ability to provide an effective anchor as consumers turn to digital means of payment,” he said.
Panetta argues that the introduction of a digital euro will allow the fiat to remain relevant as it would “maintain its role as a monetary anchor in the digital age.”
“Digital money issued by the central bank would offer the possibility for everyone to use public money for digital payments,” he said. “It would be a sound, reliable means of payment designed in the public interest. And it would preserve the coexistence of sovereign and private money that has served us well so far.”
Moves to digitize fiat currencies are currently underway in China, Russia, India, and the United States by the nations’ central banks.