How Amazon will help the ECB develop the digital euro

We all know that Christine Lagarde, the boss of the European Central Bank, is not fond of cryptocurrencies. In May, it even explained that cryptos are worth nothing.

“My very humble assessment is that it’s worth nothing, it’s not based on anything,” she says. There are no underlying assets to act as a security anchor”she said.

On the other hand, the institution is interested in central bank digital currencies. And currently, the ECB is studying a digital euro project.

In July 2021, after several months of reflection and consultation, the ECB launched a first phase of two years, with the aim of launching this digital euro.

The project is progressing well since a few days ago, it announced the collaboration with five companies which will develop user interfaces for potential use of the digital euro.

“The objective of this prototyping exercise is to test how well the technology behind a digital euro integrates with the prototypes developed by the companies. Simulated transactions will be launched using front-end prototypes developed by the five companies and processed through the Eurosystem’s interface and back-end infrastructure. There are no plans to reuse the prototypes in later phases of the digital euro project.”we read in a press release from the institution.

Each selected company will focus on a specific use case. And as for Amazon, which is on the list, it will offer an interface for payments in e-commerce. The other companies chosen are CaixaBank, Wordline, EPI and Nexi. The first two will work on peer-to-peer payments, while the other two will focus on point-of-sale.

According to the explanations of the European Central Bank, this prototyping exercise is an important step in the two-year investigation phase. And it intends to publish the conclusions of this phase in 2023.

What is the digital euro?

At the moment, even the ECB has not yet completely settled on the characteristics that its digital currency could have. But on her site, she explains:

“The digital euro would be like euro banknotes, but digital. It would be electronic money, issued by the Eurosystem (the ECB and the national central banks of the euro zone), and accessible to all citizens and businesses. »

The institution also specifies that the digital euro would not replace cash, but would rather complement it.

In any case, compared to stablecoins, the digital euro would be a “central bank”, “guaranteed” and “risk-free” currency. Indeed, the ECB points to the fact that the reliability and stability of stablecoins depend on “the issuing entity and the credibility of its commitment to maintain its value over time”.

Regarding the technology that will be used, the ECB indicates that for the moment, no decision has yet been made. But the Eurosystem is testing several approaches, including decentralized solutions.

Finally, regarding the introduction of the digital euro, the ECB ensures that this is a priority. But the institution also prefers to take its time to do things right. Once the first phase of investigation is completed in 2023, the Board of Governors will decide whether or not to proceed to the next stage.

During this next stage, which will last three years, the ECB will be able to develop services, test, or even carry out concrete experiments on the digital euro.

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