The European Central Bank (ECB) is expanding efforts to create a blockchain-based payments system. A move like this could see Europe’s leading monetary policymaker issue a CBDC, a central banking digital currency.
The ECB announced on Thursday that the initiative to develop a digital payment infrastructure will take place in two phases.
In the initial stage, Eurozone’s Monetary Authority will implement and develop a platform of payments for the settlements made in central bank currency through an interoperability connection with the Trans-European Automated Real-Time-Gross Settlement Express transfer system. TARGET, a payment settlement system, is in charge of facilitating free movement of collateral and securities throughout the eurozone.
The second phase will see the EU Monetary Authority exploring “a more integrated, long-term solution” Settlements for central bank-denominated money transactions can be done on the blockchain.
“This is an important contribution to enhancing European financial market efficiency through innovation,” Piero Cipollone, a member of the Executive Board said in a press release on Thursday.
The ECB embraces “innovative solutions” such as blockchain technology could shape the eurozone’s financial future by providing the infrastructure for its monetary authority to issue a digital euro—a centrally issued cryptocurrency that would enable Europeans to make fast and secure digital payments across continental Europe, the bank said.
According to the ECB the digital Euro project is part the ECB’s goal of achieving a market for capital in Europe. You can find out more about this website at. CBDC supporters claim that this project will boost the economy of the eurozone and strengthen its autonomy. It also increases the financial sovereignty in the region by relieving regional banks from non-European service providers.
Digital Euro: the road ahead
In 2021 the ECB began to work on developing a digital version of its euro. They started by investigating design and distribution options for this digital currency. In 2021, Central Bank began to take concrete steps towards realizing its plan to create a CBDC. They established a first phase list of priority items for their digital euro project.
During the first phase of the project, the ECB continues to work on the specifics of the blockchain-based payment system. In a statement, the Central Bank said it would also work with private and public stakeholders to customize the system for Europeans. In a statement, the Central Bank will reveal its timeline of efforts for this project. “in due course,” The ECB also added.
James Rubin is the editor
