“For The People” – The New Digital Euro does not have Web3 in the Picture

“For The People” - The New Digital Euro does not have Web3 in the Picture

“For The People” - The New Digital Euro does not have Web3 in the PictureHere’s Why the digital euro will be focused on personal use rather than Web3.

According to European Union (EU) officials, a retail digital euro will initially only allow payments initiated by people, rather than allowing businesses to settle invoices, issue paychecks, or be used in decentralized finance. The bloc has not yet decided whether to issue a central bank digital currency (CBDC) or whether to use Bitcoin-style blockchain technology. However, legislation to enable a digital alternative to banknotes and coins is expected to be published early next year. We have identified three use cases for the first release of the digital euro. Digital euro program manager at the European Central Bank, at an event hosted by the European Economic and Social Committee, an advisory body to the EU government.

Peer-to-peer payments that allow transactions between family and friends, consumer-to-business payments in physical or online stores, and payments to or by governments will be the three immediate applications. Other potential uses of the CBDC, such as wage payment, business settlements, payments initiated automatically by machine, and the functionality required to support decentralized finance, could still be considered in the future. Whether or not blockchain will be used as technology is currently not in the investigation phase, adding that officials would first consider the system’s security and throughput requirements. The functionality should not be driven by technology. Before finalizing the start of development in September 2023, central bank officials must still decide where they stand on issues such as how transactions with a digital euro will be settled and how intermediaries will be compensated.

The European Commission, in charge of proposing draught laws that could underpin a digital euro, wants the CBDC to be future-proof and compatible with Web3, but they appear to agree there is no rush to do so. A digital euro must meet new payment needs, we must also be open, adjust, and cater to those Web3 users, head of the commission’s digital finance unit, at the same event. While decentralized finance applications may be expected to take room in the future they are not the reality today. However, the industry has warned that the ECB’s step-by-step approach may jeopardize the entire plan. Some previous CBDC projects failed because they did not improve the status quo of easy payment via cash and card. A think tank specializing in CBDCs and other forms of digital money.

A digital euro must have clear advantages and use cases, whose organization is supported by companies such as Ripple and Circle. It’s used for peer-to-peer payments [or] e-commerce payments, it has to do something better than currently available payment methods. According to data released by the International Monetary Fund, approximately 97 countries are researching, testing, or deploying a CBDC.