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ccording to a recent speech, the European Central Bank (ECB) will use the digital euro for wholesale purposes. Fabio Panetta, a member of the ECB Executive Board, made the remarks on September 26 at the Symposium on "Payments and Securities Settlement in Europe — Today and Tomorrow."

Panetta stated that there is frequently some uncertainty surrounding the use of central bank digital currencies (CBDCs) for wholesale use. He stated that wholesale CBDCs “have lived for decades and have provided efficient infrastructures for the settlement of transaction data between banks in central bank money."

He defines wholesale CBDCs as the use of central bank reserves to settle interbank transfers and related wholesale transactions. He then discusses the differences between wholesale and retail CBDCs before discussing how to modernize wholesale payment systems.

Distributed ledger technology is the solution to the digitalization challenge. However, he claims that experiments must be conducted to demonstrate that the technologies offer the claimed benefits.

Collaboration with outside companies

The ECB will start prototyping user interfaces for the digital euro with external companies. In mid-September, the bank announced that it was collaborating with five companies to create a future interface design for the currency.

The goal of the prototyping was to "test exactly how good the technology behind it incorporates with believing in developing by companies." These prototypes are unlikely to be used in later stages of the project.

Prototyping should be completed by the first quarter of 2023. It will concentrate on specific use cases, such as online payments.

Is it unavoidable?

Over the last 18 months, the ECB and the European region have been working increasingly hard on the CBDC. It has started to embrace that a CBDC will be helpful and even touts numerous advantages over traditional cryptocurrencies.

A digital euro bill is anticipated in early 2023, a long time after the ECB first considered the CBDC in its exploratory phase. Still, it may be years before the digital euro is released, though it appears to be a foregone conclusion at this point.

What do you think about the digital euro being considered for securities settlement? Drop your comments by sharing this article on social media.

Posted 
Sep 27, 2022
 in 
Crypto News
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