Last month the ECB applied for a trademark – the digital Euro. The news went under the radar, but it should not surprise.
Ever since Christine Lagarde came at the helm of the ECB, she has touched on the subject regarding digital currencies on numerous occasions. A digital Euro will propel the ECB and the Euro zone at the top of the digital era and, above all, creates competition in the unregulated crypto market.
What is not to like from such a project? Unless you own some crypto, this is a terrific idea from the ECB.
ECB Prepares to Issue a Digital Euro
For the moment, the official statements from the ECB call for the preparation for a digital Euro, should the need arise. In other words, if we must implement it at some point in the future, we better be prepared. The trademark protection is only one step in that direction.
However, when a central bank of the size and importance of the ECB devotes resources to something, the market better listens. Other central banks discussed the idea in the past, like the Bank of Canada and even the Bank of England. However, the ECB is the first one to do something so far. Which as a side note, it is a bit surprising considering that Europe tends to move at a slow speed.
By no means, the digital Euro will eliminate cash – it will complement it. It will offer easy access and an easy way of paying. More importantly, compliance with the law is paramount for the new digital Euro.
Which brings us to the theme of the article. A digital currency compliant with current legislation and backed by the faith of a central bank never existed before.
For all the hype in the crypto industry so far, Bitcoin, Ripple, Ethereum and other prime coins failed to deliver on expectations. Apart from people interested in getting rich soon, there is little, or no adoption and no impact is seen on a societal level.
For sure, hodlers (i.e., people investing in cryptocurrencies and holding them for the long run) will argue that a central bank digital currency can be debased because it comes with all the flaws of the fiat one. Bitcoin, on the other hand, cannot be debased.
And maybe this view is correct. But no hodler should sleep well knowing a central bank enters the digital space.
It may be just the beginning of the end for the unregulated cryptocurrency market that we know today.