Following a two-year inquiry, the European Central Bank (ECB) recently made an announcement on October 18 announcing its decision to start the “preparation phase” for the digital euro project.

The ECB’s plan entails establishing the basis for a prospective digital euro issuance, which is anticipated to start on November 1.

It’s important to remember, nevertheless, that the issuing of a central bank digital currency (CBDC) is not yet a final choice. The declaration comes after a thorough 44-page analysis detailing the conceivable layout and accessibility of a digital euro was published.

The planning phase, which will last two years, will focus on determining potential issuers and finalising the regulations regulating the digital currency. The next phase, according to ECB officials, would involve “testing and experimentation” in line with user feedback and requirements.

“The choice to issue a digital euro is not made at the beginning of the preparation phase. The ECB made it clear that the Governing Council would only take that decision into account after the European Union’s legislative procedure was finished.

Back in June, the European Commission proposed a legislative plan for a digital euro, envisioning users accessing the CBDC through their banks. Fabio Panetta, an executive board member at the ECB, reiterated the goal of having a digital euro coexisting with cash, incorporating robust privacy features.

Our Governing Council has decided to move to the next phase of the digital euro project.

In November 2023 we will start laying the foundation for the possible issuance of a digital euro. A decision on issuing a digital euro will come at a later stage.https://t.co/xuKklame0U pic.twitter.com/Nn0Z8RggVn

— European Central Bank (@ecb) October 18, 2023

The announcement drew attention from the crypto community, with some criticism directed at ECB President Christine Lagarde. In a prank video, she suggested that a digital euro could potentially be used to monitor user payments, raising concerns among stakeholders.

The introduction of the digital euro is likely to fascinate regulators and decision-makers, especially in light of the approaching elections for the European Parliament in June 2024.

The European Commission’s legislative proposal is in line with the overarching objective of enabling traditional banking channels to accept a digital euro.

The ECB’s attention is still on careful deliberation, rule finalisation, and potential user feedback as it moves into this critical preparation phase.

Following the conclusion of the legislative process for the European Union, the Governing Council will decide whether to go on to the next phase of preparations, which will result in the release and implementation of a digital euro.

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