ECash is giving way to new forms of payment and governments want to have this transition under control. It has been a couple of years since the European Central Bank announced its project to create a public digital currency for the euro countries and now the Government of Pedro Sánchez has taken the first step to incorporate Spain into that process. Congress has just passed a non-legislative proposition that proposes launching a digital euro as a safe public currency for all citizens in the face of the advancement of technologies.
But what exactly is public digital currency? It is obviously a payment system that is under study, although some countries are already doing field tests. One of the most advanced experiences is that of China. The central bank of the Asian giant has been handling the digital yuan for two years with the idea of changing the payment system and position itself in a privileged place in this incipient revolution. Not much information has emerged about this project, which is supported by a private blockchain system (the technology behind virtual currencies) and in which companies such as Apple Pay China, AliPay and WeChat are working.
In addition, the US Federal Reserve, the Central Bank of Russia or the European Central Bank (ECB) itself are also immersed in this journey. After two years of analysis, the Frankfurt-based body confirmed this past summer that will start the testing phase of the new eurochain, which will last at least until mid-2023. The main objective of the technology that the ECB has started to develop is to guarantee privacy in transactions.
Now Spain adheres, through the non-law proposal voted this week in Congress (PSOE, United We Can, Citizens, PNV and ERC voted in favor) to this process that, according to the socialists, promoters of the initiative, will allow governments through central banks have greater control of digital money and, thus, shield the economic and financial stability of the country. According to the approved text, with the development of the digital euro it is sought “not to leave anyone unprotected from the digital age”, guaranteeing a universal and safe means of payment for all citizens, also those who, due to age or other circumstances, have a more difficult time access to these new payment technologies.
Bitcoin is the best known type of cryptocurrency because it was the first to spread as a form of exchange (its creation dates back to 2009), but little by little new alternative digital currencies such as ether or ripple have been appearing. All of them are based on a technology that avoids their copying and ensures ownership, but they do not exist physically but are stored in a digital wallet. These systems are not backed by central banks, that is, they live outside of institutional control.
Both the Bank of Spain and the National Securities Market Commission (CNMV) already warned in 2018 of the risk involved in investing in cryptocurrencies. They pointed to their high volatility as a danger since they can be attractive in a moment but lose value quickly. That is the objective of the digital euro, to give a boost to digital currencies but with the support of the institutions and, in principle, with greater security, according to the initiative approved in Congress.
The socialist group clarified in the debate that this will not end the companies that offer payment solutions, but that the objective is a hybrid model in which there is a public system for the circulation of digital money that coexists with other private media. The entry into the process of governments would allow, logically, that the public euro had the strength to be able to go on to lead this whole new world. It is not the goal to do away with cash, you could conserve your own space.
The digital euro. Spain, via a non-legislative proposal in Congress, adheres to the ECB’s digital euro project. After two years of studies, the Frankfurt-based body plans to have this public digital currency ready by mid-2023.
Governments control. The objective is to provide citizens with greater “security” in the use of cryptocurrencies. Its creation is justified in the volatility presented by private systems such as bitcoin or ether. The digital euro would be backed by the ECB and the central banks of each country and in principle would be more accessible to citizens.
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