The European Central Bank(ECB) recently announced creating a new digital euro version of a multi-year project. Experts have said it’s like a digital wallet that you can store at a European bank. The central bank wants to meet the increasing demand for electronic means,
They want to give private companies some competition from Bitcoin’s digital currency and Facebook FB.O, a report by Reuters. Here are among the top questions from people across the world:
How different is the digital Euro
It’s in the form of banknotes and coins, which are in digital format. The payment method gives the owner a mandate to claim the money from ECB. It’s like an online back wallet held by ECB. It will reduce the cases of fraud in commercial institutions.
In recent years, commercial institutions have run out of money hence the customers having no shoulder to depend on. But the ECB, the producer, can never experience bankruptcy. Thus, it will be much safer than private sector institutions.
How does one open an account?
The CEO of ECB gave banks the mandate to decide the best way to make users’ accounts. Also, some fintech companies will have that mandate to provide the best method for registrations. After that, banks and fintech will provide customers with digital euro wallets on behalf of ECB, a report by CNBC.
Can an individual Convert the Available Savings to Digital Euros?
The ECB will set a limit upon which a customer can own. All savings cannot be converted into digital euros. But if you have more amounts and like digital euros, you will be paying an extra amount.
The primary function of the digital Euro
Bankruptcy in commercial institutions has led to the digital euro idea. Sweden has recently experienced a problem with physical cash. Payment service providers like MasterCard and Visa can be found outside the European block. It puts private companies in control of the foreign exchange rate. The Facebook company promised to make its currency, which could be a threat to the central bank.
Is it possible to spend the digital Euro offline?
It is only applicable for a small amount. This is for security purposes as people will tend to evade payment of tax. So you can only spend less than hundreds of euros while offline.
Does it Mean Physical cash will cease?
The ECB executive said average physical cash would still exist. The digital Euro is a supplementary method of keeping money safe while reducing some issues. In 2016, the ECB survey showed that cash accounted o 79% in all places of sale. Some people have feared that ECB may decide to end the cahs money of the coming years. The Digital euro will bring long monetary policy rules like a 0% rate on deposits or transfers.
When will the project be launched?
The design of the digital Euro will take less than three years. But after that, we have some signs that the European bank will come from various nations before passing as a law. If everything goes as planned, the method of payment will take another three years for implementation. EU treaties are yet to foresee a digital euro. In general, let’s expect the digital Euro in the next five to 7 seven years.
Will Digital Euro employ blockchain technology.
Yes, that is one of the available options. Cryptocurrency is among the most widely used means of purchasing goods. Most online traders will pay with this means to avoid tax in some circumstances.
Fabio Panetta, a member of the ECB board, said Distributed Ledger Technology lacks enough experience to serve everyone. The ECB’s regular payments are much better than cryptocurrency owners. But the ECB might decide to use both methods to come up with the best product.
What about people outside Euro Zone?
An average person from Poor countries cannot raise 3000 euros. If it is available, then commercial banks will have a rough time on deposits. But the ECB executive said if other central banks decide to launch the digital currency, it will be easier. They could make a big difference to the world.
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