The European Central Bank (ECB) is accelerating its research on a digital euro by examining the use of public blockchains like Ethereum and Solana.
Exploration of Public Blockchains
According to the Financial Times, the ECB is considering public blockchains as the backbone for its digital euro. This decision is propelled by growing concerns that dollar-pegged stablecoins could undermine the euro's international role.
The ECB is weighing a model akin to Ethereum or Solana, assessing the benefits and drawbacks of public networks compared to private ledgers. Public blockchains can offer global reach and innovative capabilities for transactions and smart contracts.
Response to US Stablecoin Legislation
The implementation of the GENIUS Act in the US, which regulates dollar-pegged stablecoins, intensifies pressure on Europe. The ECB considers its actions as a response to the near-monopoly status of dollar stablecoins in the market. ECB board member Piero Cipollone has emphasized that Europe cannot excessively rely on foreign payment solutions.
Progress of the Digital Euro Project
The digital euro project is currently in its preparation phase, which commenced on November 1, 2023. The ECB has been working with banks, retailers, and citizens. In its report, the ECB notes that around 70 firms have tested prototype features of the digital euro, and focus groups have been convened to refine requirements.
The development of the digital euro continues amidst the evolving realities of international finance and the stablecoin market. The ECB aims to create a secure and accessible digital euro that can support the region's economic sovereignty.
