The switch to a Digital Currency is moving swiftly across the planet. Many systems are in place and other countries plan to roll out theirs in 2023 and 2024. You can read previous articles about this important topic here and here.
I want to share an update with journalists who cover financial news in the European Union (EU). The European Commission held a “High Level Conference” a few weeks ago in Brussels (November 7, 2022) and their report is revealing about future plans for a digital currency in the EU.
You will find information on the linked pages below about —
The legislative process
Cost of implementation
Regulation and supervision
Sustainable finance
Digital finance technology
Corporate disclosure of climate-related information
Benchmark low-carbon and ESG disclosures
Green bond standard (European green deal)
Consumer finance and payments
Insurance and pension funds
Financial crime
EU and the world
EU Policy Making Timeline
Let’s begin by looking at a policy-making timeline that includes the first quarter of next year (2023) for the EU. I’ll start with the most recent information and move backward in time. You’ll find links to information about each step in the timeline that will help with your reporting. History is important to give your readers, viewers, and listeners context about this story.
The Eurosystem has launched the investigation phase of a digital euro project. Many other jurisdictions are also exploring options for central bank digital currencies. The Commission has announced a legislative proposal on a digital euro for early 2023. In this context, the conference will be an opportunity to discuss key regulatory and policy aspects of a digital euro.
ECB President Christine Lagarde said that the European Commission is set to release a legislative proposal defining the digital euro’s legal tender status and determine its privacy features in the near future.
The conference was organised jointly by the European Commission and the European Central Bank.
Towards A Legislative Framework Enabling A Digital Euro For Citizens And For Business
First quarter 2023
NEXT STEP - Legislative proposal
The Commission plans to adopt a legislative proposal on a digital euro for the EU.
7 November 2022
NEXT STEP - High level conference
The Commission and the ECB jointly organise a high level conference entitled "Towards a legislative framework enabling a digital euro for citizens and businesses".
5 April 2022
Consultation
The Commission launches a targeted consultation on a digital euro.
14 July 2021
Investigation phase
The ECB launches the investigation phase of the digital euro project. The investigation phase consists of looking at the various design options, user requirements, and how financial intermediaries could provide services based on the digital euro. During this phase, the Commission will continue to closely cooperate with the ECB on analysing and testing the various design options in view of policy objectives.
19 January 2021
Agreement
12 October 2020
Consultation - ECB
The ECB launches a public consultation on a digital euro.
End date: 12 January 2021
The Potential for Change in Our Shared Currency
There are three reasons why I believe a digital euro will be needed. Number one, our citizens will want us to as they begin to see big change take place within the private sector and the use of other technologies to facilitate payments and to store a value. Secondly, there will be needed in the future to continue to allow the ECB to deliver the full implementation of their monetary policy and to protect the transmission mechanism that is necessary for the ECB. And then thirdly, I believe monetary sovereignty is an essential element of any political project that looks to win the support of citizens. And with the change that is underway in our global and digital economy, I believe the euro having a strong digital dimension will be a strong pillar in the euro and the European Union protecting its monetary sovereignty. Paschal Donohue, President of the Eurogroup
Unlike cash, digital payments are inherently capable of generating an audit trail of transactions and spending behaviour. The potential for personal information connected to this activity to be made available beyond its intended use leads to significant privacy concerns. Individual users may often prefer to keep their data – not only their personal data but also potentially sensitive or revealing spending information – anonymous. They may also have concerns around commercial data-sharing and monetisation of data, and the potential discrimination and unfair business practices that can occur as a result. CBDCs and other new forms of digital money: Goodbye privacy and anonymity? November 11, 2022
Here is other information that you may find helpful while developing your coverage for next year —
ECB to Limit Digital Euro Use and Storage
Spanish banks to road test digital euro
Visualized: The State of Central Bank Digital Currencies
News Update!
Several U.S. banks agreed last Tuesday to participate in a 12-week digital dollar pilot project with the Federal Reserve Bank of New York. The news came in after I sent the last newsletter. I wanted you to know that I will report on the pilot program as it develops.
The 12-week PoC will test a version of the RLN design that operates exclusively in U.S. dollars where commercial banks issue simulated digital money or “tokens” – representing the deposits of their own customers – and settle through simulated central bank reserves on a shared multi-entity distributed ledger. The PoC will also test the feasibility of a programmable digital money design that is potentially extensible to other digital assets, as well as the viability of the proposed system within existing laws and regulations. BusinessWire News Release
Notice that programmability of digital money (tokens) will be part of the test. I’ve reported about that in previous newsletters. Banks and the Fed also want to see if a programmable digital money design is “potentially extensible to other digital assets.” What does that mean? I’ll dig deeper into that in future newsletters.
Next Newsletter
The United States is getting younger. Gen Z is quickly becoming one of the largest generational groups in the country. How will they get their news in the coming decades? I’ll share some fascinating information about that in the next newsletter.
Comments Welcome
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Newsletter Purpose
The purpose of this newsletter is to help journalists understand how to do real journalism and the public know how they can find news they can trust on a daily basis. It’s a simple purpose, but complicated to accomplish. I’ll do my best to make it as clear as I can in future newsletters.