Currently the European Central Bank has launched a euro digital project which is also called crypto euro. Announced as a major breakthrough for the eurozone, many shadowy areas leave however many septic monetary experts.
What are we talking about?
Unlike a traditional cryptocurrency, the digital euro is in no way decentralized. The central bank retains total control over the system. So we cannot talk about a decentralized system. However, the transaction management technology used is very similar to the blockchain systems we know.
Why such a system?
Currently the European Central Bank needs intermediaries to manage and interact with enterprises and households, such a system would allow the ECB to have better control over the impact of its monetary policy. This would allow for more effective and responsive monetary policies. The major losers of this principle would be the banks, their role as intermediaries is undermined in this system.
What are the advantages of such a system?
- No bank intermediaries.
- A very secure system.
- A geopolitical autonomy.
- Improved efficiency of monetary policies.
- The possibility of distributing liquidity directly to citizens.
What are the disadvantages of such a system?
- The possibility of total tracing of financial exchanges.
- In the event of unreasonable monetary policy, the impact on the real economy could be amplified.
- The risk of disappearance/replacement of cash.
- Threat to independent and decentralized finance.
- Risk of threat vis-à-vis the subcontracting of the management of the blockchain network if managed by private intermediaries.
What does that mean?
A digital euro would be a tool that could allow a better overall financial management however such a system raises many questions in particular with regard to the freedom and anonymity of financial transactions. For lack of more concrete progress at the moment, it is difficult to see more clearly but it is certain that it is a theme that will have to be followed.