The wave of financial digitalization is sweeping across Europe at an unprecedented pace. At the heart of this digital transformation lies the intriguing concept of Central Bank Digital Currency (CBDC), a key catalyst in shaping this technological revolution. From the quaint, secluded places of Ireland to the sun-drenched shores of Spain, the discussion around digital currencies is resonating loud and clear.
Unifying digital euro efforts across eurozone countries
As part of the Eurozone, Ireland is at the vanguard of digital transformation, working with other Member States such as Spain, France and Italy to interpret the promise and implications of the introduction of a digital Euro.
The European Central Bank (ECB) is the central coordinator behind the creation of the digital euro, leveraging the individual resources and expertise of each eurozone country to shape the consumer and wholesale versions of this emerging currency.
In the words of European Central Bank President Christine Lagarde:
“The euro is the most tangible symbol of European integration and it commands the high respect and trust of citizens. We are eager to advance our collaboration with other EU institutions to realise a digital euro and ensure our currency is ready for the future in the digital age.”
Spain: Pioneering the path to digital currency
Spain has been particularly assertive when it comes to the digital euro. For example, the country’s central bank, the Bank of Spain, has drafted a strategic roadmap to assess the expected impact on Spain’s economic and financial architecture.
Meanwhile, European Central Bank executive board member Fabio Panetta stressed the need to ensure accessibility of the digital euro, comparing it to ubiquitous cash.
Collaborative experimentation: the digital euro in action
A coordinated experiment involving the Central Bank of Estonia, the European Central Bank and other eurozone countries has triumphed in trials for a digital euro, processing 300,000 transactions per second, with each transaction executed in less than two seconds.
On the other hand, the Bank of France has become a major player in studying the feasibility of a digital euro, with a series of successful trials and partnerships facilitating the issuance and settlement of digital bonds through blockchain technology.
Considerable steps towards a digital future
While Italy and Austria are investing heavily in research and experimentation, Germany is taking a more cautious approach. Nevertheless, the German banking industry recognizes its potential and sees the digital euro as an important stepping stone for future monetary autonomy and digital expansion.
Sweden, an early adopter of CBDC development, has completed the third phase of its e-krona program, focusing on governance and programmability. Meanwhile, Norway’s central bank is expected to wrap up its CBDC trials and is close to making a launch decision.
Support for digital euro plans
Estonia, Finland, and Lithuania support the ECB’s digital euro efforts. Meanwhile, Lithuania has issued LBCOIN, becoming the first country to issue a blockchain-based digital collectible coin.
However, not every European country is equally enthusiastic about CBDCs. The Swiss National Bank (SNB) has expressed skepticism about the merits of a national CBDC, but it continues to be actively involved in cross-border CBDC projects.
The Netherlands has emerged as a leader in research and development, with the goal of launching a digital euro within the next two years. In contrast, Denmark claims its digital system eliminates the need for a retail CBDC. The Czech National Bank, while monitoring global CBDC trends, sees greater value in strengthening its current payment infrastructure.
