The idea of digital currency is prevalent in the modern world. Step by step people are thinking about non-traditional money and this trend will definitely prevail in the future. We already have examples of the digital yuan in China and the United States is also contemplating the digital USD.
However, it is not yet clear how things will unfold, because it is not an easy job to implement it carefully. Digital euro is another idea and it could be the one to succeed in the long term and in this article we will have a look at this currency.
In October, the European Central Bank published scenarios for the issuance of the digital currency. The exact timing of its appearance is not yet known. As specified in the ECB, it will not be a substitute for cash, but will only complement them. The European Central Bank may be pushed to the release of the digital Euro for several reasons: increased demand for electronic payments, a significant drop in cash turnover, as well as the mass issuance of such payment instruments by other central banks. In addition, it is necessary, among other things, to compete with private tokens such as Bitcoin.
But the digital euro is unlikely to look like the usual cryptocurrency. This is a cryptocurrency with a single point of control. And, as the statement says just European central banks, it is absolutely not a fact that for this purpose at all it is necessary to use cryptocurrency technology, perhaps these digital currencies can be made on simpler and more tested electronic money technology.
Why can the digital Euro succeed?
The first reason that comes to our mind is the fact that the euro is one of the most traded currencies in the Forex market. A lot of people use it as a currency pair for trading and based on this cTrader review statistics show that customers are most likely to choose the Euro over other currencies.
Another reason could be the European Economic zone which is pretty free and most countries use the EUR on a daily basis. The USD could be the stablest currency in the world but in the European part, the euro is without any competition. After the USD the euro is considered to be the stablest currency.
Furthermore, during the pandemic, the demand for the Euro rose notably. This tendency continues even now and is unlikely to change in the future.
What are the possible disadvantages of the digital Euro?
The second story is that, indeed, central banks have a very big concern, which is, so to speak, the instrument of currency control.
If you have a European cryptocurrency, it is very difficult to ban the circulation of this cryptocurrency, for example, in China. And in this sense, modern currency control tools are meaningless. There are a lot of fears, and I would not think that making such a decision would simplify the legalization of classic cryptocurrencies such as bitcoin, it will most likely complicate because in the true sense such cryptocurrencies will displace from the market partly Bitcoin and similar private decisions.
How the Ministry of Finance updates the regulation of virtual currencies
In May this year, the digital euro was tested by the Bank of France on its own blockchain. The regulator was trying to understand whether currency could be moved between banks. And in September, the European Commission introduced the rules for regulating cryptocurrencies.
The digital euro is unlikely to need to create special regulations. The emergence of national currencies in this form will help the development of technologies in general - not only public but also private.
There will be no need for substantial legal regulation, as it is issued by the central banks of countries and even the unions of states, and therefore there will be no problems with the provision of these currencies. It is clear that they will be provided by the reserves of the countries concerned.
In the case of the volatility of cryptocurrency markets, people very often used the reserve currency USDT. There have been attempts in Switzerland to create a cryptocurrency secured by the Swiss franc. However, it was not at the state level.
Therefore, such currencies are at least as a reserve on cryptocurrency platforms, especially if they will be quoted on these platforms.
This, in principle, will be a very good sign, and the volatility of such cryptocurrencies will not be relatively non-digital analogs.
At the end of September, the European Central Bank applied for the registration of the trademark "digital euro." Now the report on the new form of the national currency is open for public consultation, it will be considered until the middle of next year. Among the main risks of the digital euro currency is the security of the personal data of citizens.