ECB President Christine Lagarde positioned the digital euro as an alternative to cryptocurrencies such as Bitcoin. Below we expose what's in it for you, and for crypto.
A couple of months ago the European Central Bank (ECB) announced that a proposed digital euro will be tested over the next two years. By stating that this “aims to ensure that in the digital age, citizens and firms continue to have access to the safest form of money, central bank money,” ECB President Christine Lagarde positioned the digital euro as an alternative to cryptocurrencies such as Bitcoin. The attractiveness of these private peer-to-peer initiatives of “stateless” money will be influenced by the new Central Bank Digital Currency (CBDC). The two forms of money, which can simultaneously compete and complement one another, will always be interrelated.
But first, a note on digitization versus digitalization: while digitization is the act of getting material into zeros and ones, digitalization is about creating native digital assets. So, whereas an e-book is a digitized book, Wikipedia is a digitalized (or digital) encyclopedia. The process by which Wikipedia came to be is unfathomable in a physical world. If you had to reprint Wikipedia every time someone made an edit, you would very quickly run out of paper.
Although people may think of money as already being fully digital, it is merely electronic. Digitized, not digitalized. Crypto is digital by design. For legal tender, the digitalization is more complex. Commercial banks can already turn your banknotes and coins into dematerialized euros when they are deposited in your bank account. Furthermore, wire transfer and bankcard systems are popular tools to carry transactions with these digitized forms of money. In fact, most of the money issued by central banks has already been digitized for decades. But those are not digital assets, they are merely old assets that have been transformed into zeros and ones.
Etienne Goffin - Senior economist from Brussels, Belgium. He has a 10+ year career in the financial sector both within the public sector (Central Bank of Malta) where he was an innovation consultant and economic advisor as well as the private sector where he has worked as a banking consultant (Needle Strategy) with expertise in corporate financing, monetary policy, and business innovation. He advised both governments and fintechs globally. Etienne is also Senior Economist and a member of the public affairs team at OSOM. You can find him @EtGOFFIN on Twitter or at goffin.eu
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