The ECB highlighted plans to launch an investigation phase of a digital euro project and said its energy consumption would be ‘negligible’ compared to Bitcoin’s.
The European Central Bank will start an investigation phase of a digital euro project, which will last 24 months after years of dabbling with the idea. The organization promised privacy protection and also lower energy consumption than Bitcoin.
Although the idea of a central bank digital currency has floated around for years, the ECB has never shown genuine interest in actually looking into it. In the past, bank officials, including President Christine Lagarde, have shared possibilities but never precise plans.
Now, though, the situation has changed. The institution announced earlier on July 14th that it has “decided to launch the investigation phase of a digital euro project,” which will go on for two years.
Within the testing period, the ECB’s research department will “aim to address key issues regarding design and distribution” as the digital version of the euro “must be able to meet the needs of Europeans.”
At the same time, the CBDC should help “to prevent illicit activities and to avoid any undesirable impact on financial stability and monetary policy.” Nevertheless, the bank reaffirmed its intentions to have the digital euro complement cash instead of replacing it.
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments with encouraging results. All of this has led us to decide to move up a gear and start the digital euro project.” – commented now Lagarde.
Furthermore, ECB’s President added that the final product must ensure that Europeans still “have access to the safest form of money – central bank money.”
The statement promised that the energy needed by the digital euro would be “negligible compared with the energy consumption and environmental footprint of crypto-assets, such as bitcoin.” Of course, it’s worth noting that the Digital Euro will likely have little to do with cryptocurrencies, or Bitcoin, as a whole.
The topic of BTC’s alleged impact on the environment has grown in popularity lately, especially after Tesla’s Elon Musk questioned it. Since then, China also started a nationwide crackdown, citing such issues.