The Digital Euro Could Be Launched by 2026

The Digital Euro Could Be Launched by 2026

by | May 16, 2022 | Cryptocurrency

According to Fabio Panetta, a senior official at the European Central Bank (ECB), a digital euro could be issued within the next four years by the European Union (EU). A potential first use would be peer-to-peer payments.

Due to concerns about Russia’s war against Ukraine and the rise of private stablecoins such as Facebook’s now-abandoned Libra, the timeline for the central bank digital currency (CBDC), has been moved back and forth.

What would the digital Euro be used for?

At an event at the National College of Ireland, Fabio Panetta, an executive board member of the European Central Bank, or ECB, has said: “The idea would be that let’s say, four years from now, we will be ideally ready to issue the digital euro,” and also expressed his optimism that the CBDC could be launched within the next four years, although it will be a complicated process that hasn’t been done before. 

Panetta suggested that a peer-to-peer (P2P) payment solution, which allows transactions between friends, could be the first test ground for the new technology before it spreads to other areas such as online payments or business payments such as physical and online shops.

He said that a P2P payment system that covers large numbers of users in the whole euro area could be a fertile ground for the adoption of a digital currency. Research has shown that the application would have the greatest impact on early adoption.

The ECB began a two-year investigation phase in October to examine issues such as which use cases should be prioritized. However, the ECB is still not sure if it will issue a digital currency. Panetta previously stated that the realization stage, which is due to begin late next year, could last for three years.

Christine Lagarde, President of the ECB, stated in March that the sanctions imposed by the war in Ukraine were a reason to accelerate the plans. However, other EU officials Monday suggested that they are letting their feet off the pedal.

We also have to note that Jurgen Schaaf, an ECB advisor, stated that the EU’s research and experiments on a digital euro are not a guarantee that they will launch a CBDC.

Why is the EU researching a CBDC?

After an industry consortium led Facebook suggested its own cryptocurrency, Libra, the idea of the EU issuing its very own CBDC was born. The Libra project was later renamed Diem and abandoned.

Mairead McGuinness (EU’s financial-services Commissioner) said that there was a feeling of urgency back some time ago, due to the fears of what might happen with private providers. McGuinness said that they will not hurry the research process. They want to move fairly quickly, but  “not hastily.”

Panetta stated that recent declines in the crypto market private may be another reason to continue the project.

Stablecoins lack the regulatory safety net that banks have and are, therefore “vulnerable to runs”, he stated. He cited the crash of TerraUSD (UST) from May 9th-13th. The supposedly stablecoin was issued and backed up by the Luna Foundation Guard.

Another example of an unregulated stablecoin is Tether (USDT), which also lost its peg to the USD dollar during the same week. Luckily, the USDT quickly recovered. 

Another reason for EU’s urge to research and regulate cryptocurrency is the war between Russia and Ukraine. Following the invasion of Ukraine, the EU and U.S. implemented severe sanctions against Russia. However, there are many concerns over the role of crypto in evading sanctions. This has prompted regulators around the world to accelerate their efforts to regulate the sector.

At the same time, U.S. President Joe Biden issued an executive order regarding crypto Wednesday encouraging federal agencies to adopt a common approach when regulating the sector. He asked the government to evaluate the benefits and risks of creating a digital currency.

Russia to Use Crypto in Commercial Relations With Africa

Russia to Use Crypto in Commercial Relations With Africa

by | Apr 14, 2022 | News

A representative of Russia’s Chamber of Commerce and Industry called for the government to carry out cross-border settlements using CBDCs (central bank digital currency) and cryptocurrency.

According to TASS, a local Russian publication, Sergei Katyrin, President of the Chamber of Commerce and Industry, wrote a letter to Mikhail Mishustin, the Russian Prime Minister, containing a series of proposals for developing cooperation between African countries. 

Russia to create a new bank to support economic trade with African countries

Katyrin advocated the use CBDCs (central bank digital currency) and cryptocurrency for mutual settlement and payment as part of Russia’s intent to develop more economic relationships with African countries, as a way to circumvent the Western sanctions imposed as a consequence of the Russian invasion of Ukraine.

Sergei Katyrin stated, “It seems useful to instruct the Ministry of Finance of the Russian Federation, together with the Central Bank, to ensure providing intergovernmental agreements with African states on the use of national currencies and cryptocurrencies in mutual settlements and payments.”

He also mentioned that the government should create a new export-import bank to support small and medium-sized enterprises in Africa.

At the same time, some African countries consider cooperation with Russia-linked blockchain networks.

Africa is starting to adopt crypto on a larger scale

At the beginning of April, three African countries, Cameroon, the Democratic Republic of the Congo (DRC), and the Republic of the Congo made a joint announcement about their plans to adopt TONcoin, the native coin of Ton blockchain. The announcement stated that each country would make a gradual transition to adopt cryptocurrency as a central pillar in their economic structures.

The TON blockchain is supported by the TON Foundation and has raised funds of around $250 from big companies from the crypto industry. Huobi Incubator and KuCoin Ventures were among the fund’s contributors. As projects are accepted, the fund will deploy funds via incubation, investment grants, hackathons, and educational programs. 

Benjamin Rameau, the managing partner of TONcoin Fund, states that they are focusing on Web 3-related developments and are currently incubating a non-fungible token (NFT) and a decentralized exchange. He added that wallets, NFT marketplaces, and decentralized finance are all possibilities for the fund.

Unofficially, TON has been associated with Telegram, the privacy-focused messaging app, as its co-founder, Pavel Durov expresses support for TON and possible integrations on the Telegram app. 

According to reports, the DRC may also launch a new national stablecoin on top of TON blockchain. 

Other African countries have also reported CBDC projects, including Kenya, Ghana, and the Republic of South Africa. Ghana worked last year to build offline capabilities to support its potential CBDC. This was to encourage its use in all sectors of society.

Crypto status in Russia

Russia continues to work on issuing a new federal bill regarding the use of cryptocurrencies after they banned crypto payments in 2021. But only one year later, in mid-February 2021, the Bank of Russia launched the digital ruble trial. Russian citizens successfully transacted the digital ruble and the trial was a success. 

The digital ruble trial included 12 financial institutions and three of them have already successfully implemented the CBDC platform. During the first stage of the process, users will open digital wallets on the platform’s mobile application. They can also convert the fiat in their bank accounts into CBDC and use tokens for national transactions. 

The next stage of the trial is to test the digital rubles as a payment method in stores. More developments are planned for the CBDC that will enable users to use it as they use fiat currencies.