“A digital euro is a virtual money backed and issued by the European central bank”
Officially launched in July 2021 by the European Central Bank (ECB), the project will use a database run by the central bank and government. This database will keep a record of the amount of money held by every entity owning this currency, such as people and corporations.
Apart from being a system of efficient retail payments, this traceable money aims to help governments better control illicit payments and tax evasion, as well as tackle money laundering and terror financing.
A similar project has been launched in China already. Their e-yuan is circulating since June 2021 and has experienced exponential adoption since its creation with more than 140M active digital wallets (10% of the whole pop).
In their white paper which draws the outlines of their monetary project, the People’s Bank of China (PBOC) confirmed that Big Data analysis is a core aspect of their project. They can monitor how money flows from region to region, analyze consumption activities or detect system risks earlier than they could have otherwise.
The digital euro will dispute banks’ role in this new economic landscape. The ECB is well aware and said they will be cautious to avoid disinter-mediating banks (borrowers could go directly to the capital markets rather than to banks to obtain a credit). On the other hand, the ECB will go against fully anonymous accounts to avoid illicit activities.
