Electronic means of payment have been known for some time in the form of cryptocurrencies such as Bitcoins and Co. According to current EU plans, the digital euro will soon be introduced to counteract the often controversial cryptocurrencies. In this article, we tell you exactly what digital currencies are and what you can expect from the digital euro.
There are various digital currencies. Cryptocurrencies are not real means of payment in the true sense of the word, but merely enable digital payment transactions in the form of cryptographically encrypted transmission protocols.
For a better overview, we have compiled some examples of digital currencies for you:
The digital euro is to come, and the EU Commission's plans for its introduction are ambitious. A corresponding decision for the new digital currency is to be made as early as 2023. But some hurdles still have to be cleared. The EU Parliament must approve the draft, as must all EU member states.
It will therefore still take a while until the final introduction. The current assumption is that it will be launched in 2025. First, the digital euro must go through a test phase for at least two years. Only when this phase has been successfully completed will the decision to launch the digital European means of payment be made.
Did you know? Countries outside the EU are also working on introducing digital means of payment. China, for example, is working on its own digital currency, the yuan. India is also working on the digital rupee.
The actual euro in the form of coins and notes is to be retained after the introduction of the new digital means of payment. In addition, there will then be the digital currency "digital euro", with which one wants to create a good alternative to cryptocurrencies. The digital currency is to simplify the entire payment transaction for consumers and companies.
A digital currency like the digital euro is intended to benefit consumers and businesses across the EU. The European Central Bank (ECB) primarily wants to strengthen the stability of the euro against cryptocurrencies.
Furthermore, the digital euro is to be issued, protected and regulated by the ECB like traditional cash. It would thus be just as trustworthy as cash, but should be much more flexible to use in everyday life. In addition to the cash that will continue to be available, the digital euro will be booked to an extra account to guarantee security and stability.
In general, the introduction of a digital currency would bring three major advantages with it. We have compiled them for you:
Payments with the digital euro should be possible automatically within seconds. Payments abroad can also be made very quickly.
Efficient security mechanisms and encryption provide the necessary security. The digital euros are then stored in a virtual wallet. Payments are made by app or QR code, either via an online procedure or offline via Bluetooth, as an internet connection is not always available everywhere.
When you pay with the digital euro, no personal data is to be transmitted. So paying with digital currency remains just as secure as paying with cash.
For companies, the digital euro is another step towards more digitalisation of business processes, which can save a lot of time and costs. Especially in cross-border payment transactions, the digital euro offers great potential for businesses. Today, transfers abroad often still take several days, which has an impact on the scheduling of deliveries of goods or services.
Digital currencies are in vogue - several countries around the world are currently working on introducing them to offer an alternative to cryptocurrencies. The EU has also set itself the goal of establishing the digital euro in the next few years and making it as stable and secure as classic cash.