The next major player in the digital currency space seems set to be the European Union, which has announced plans to introduce a bill in early 2023, setting out the legal foundation for ongoing work by the European Central Bank.
The value of cryptocurrencies has grown enormously over the past two or three years (with some notable downturns along the way) and it seems that governments and governing bodies around the world are taking notice and seeking to front-run citizens experimenting with alternative currencies and payment systems.
"If we don’t satisfy this demand, then others will do it," ECB Executive Board member Fabio Panetta said in mid-November. "As co-legislators you will play a key role in any changes to the EU legislative framework that may be necessary to introduce a digital euro."
Is it a good idea?
The plans were originally announced by EU finance chief Mairead McGuinness at a fintech conference.
We'll need to see the exact plan the EU is proposing to know for sure, but there are some clear benefits as we move into an increasingly digitalised world.
According to the ECB, the digital euro would be exactly that: "The digital euro would still be a euro: like banknotes but digital," the bank says. "It would be an electronic form of money issued by the Eurosystem (the ECB and national central banks) and accessible to all citizens and firms."
"A digital euro would not replace cash, but rather complement it. The Eurosystem will continue to ensure that you have access to cash across the euro area. A digital euro would give you an additional choice about how to pay and make it easier to do so, contributing to accessibility and inclusion."
These are lofty goals, of course, and making them a reality will be difficult. The fact that the EU is waiting until next year to even introduce the legal basis for the digital euro shows how methodically the bloc and ECB is undertaking its work.
After cryptocurrencies broke into the mainstream in 2021, governments around the world are taking serious looks at how to integrate digital technologies into their own currency frameworks.
China, for example, has been testing the e-CNY at the 2022 Beijing Winter Olympics (at the expense of official payments partner Visa), despite concerns over blockchain technologies and an overall ban on crypto-related activities in the country.
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