In a Reddit post, the Stellar community discussed the latest developments regarding the possible issuance of central bank digital currency (CBDC) by the European Union. According to the President of the European Central Bank, Christine Lagarde, a decision on the project will be made by the middle of the year.
Lagarde was in an unfavorable position on cryptocurrencies, CBDCs and digital assets. The president of the bank was more in favor of stable coins. However, in an interview with Bloomberg, Lagarde said the decision to approve the digital euro would be made by the Governing Council.
The ECB President outlined the roadmap for the digital euro and said he would shortly publish an analysis of the public consultation process that has opened for the project. The institution will then present these results to the European Parliament and receive the green light to pilot the CBDC.
Lagarde estimates that subsequent assessments will take anywhere from 6 months to 1 year. The introduction of the digital euro can take a total of 4 years. The ECB President stated:
Because it’s both a technical endeavor and a fundamental change, because we need to make sure we’re getting it right. We owe it to the Europeans; You need to feel safe and secure. Know that you own a central bank backed bank […] Equivalent to a digital banknote with the same level of security. […] We have to make sure that we are not breaking a system, we are improving the system.
Stellar’s functions would favor Digital Euro
Lagarde stressed that the “intermediaries” dependent on the current system can continue to work with the current institutions, lines of credit and cash that will “coexist” with the CBDC. The backbone of the project is the creation of an improved payment system “safe, sound and secure for Europeans”.
In the Stellar community, many users speculated about the possibility of deploying the CBDC over the Stellar Lumens blockchain. One user involved in the discussion indicated that the institution could choose this option to take advantage of a “public-private partnership”. The user stated:
You’re not breaking the current system down to keep it secret again. The secrecy of the entire current financial system is the biggest problem and why no one trusts bankers. (…) The money has to be a public utility that everyone trusts.
Users who supported this thesis stressed that Stellar Lumens meets the requirements outlined by Lagarde: ability to process transactions, cross-border remittance and exchange options.
The church could not reach a consensus. Most users believe that the banking institution will use a private blockchain specially designed to host the CBDC. However, they did not rule out that the digital euro could be “interoperable” with other CBDCs and even convertible into crypto currencies on the Stellar Lumens, Ethereum or other blockchains.
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