Amazon will participate in the creation of the digital euro, the future European alternative to cryptocurrencies

The European Central Bank (ECB) is preparing for the arrival of the digital euro. To develop its alternative to cryptocurrencies, the monetary organization turned in particular to Amazon, the American giant of online commerce.

This Friday, September 16, 2022, the European Central Bank (ECB) unveiled the names of the five companies responsible for participating in the design of the digital euro. Unsurprisingly, this dematerialized currency project was entrusted to banking organizations.

The press release lists partners as CaixaBanka Spanish financial company, Worldlinethe French payment specialist, European Payments Initiativea payment project aimed at competing with Mastercard and Visa, and point-of-sale payment specialist Nexi.

Small surprise, the central bank, the entity in charge of issuing the euro, also entrusted the project to an American multinational : Amazon. The ECB clarifies that the company is included in the initiative as a system of ” payments for e-commerce “.

The selected companies will develop potential user interfaces for the digital euro » in collaboration with the ECB. These prototypes will serve as the basis for simulated transactions. The central bank specifies that the prototypes developed will not be reused in the rest of the project. Clearly, the interface of the final version will be different from the proposals of Amazon and others.

Amazon has tentatively entered the digital payments industry in recent years. The American giant notably recruited a digital asset specialist Last year. At the same time, Amazon also hired a product manager specializing in blockchain technologies.

Related: The CEO Responsible For The May 2022 Crypto Crash Is On The Run

The digital euro, an alternative to cryptocurrencies?

The digital euro is a central bank digital currency (MNBC). It is a 100% digital version of a fiat currency intended to facilitate payments and exchanges between banking institutions.

The ECB is developing this digital version of the currency with the aim of offering an alternative to cryptocurrency, such as Bitcoin or Ether. The digital euro is specifically designed to respond to the emergence of stablecoins, these tokens indexed on a fiduciary currency. Among the most popular stablecoins, we find the USDT, the USDC, the BUSD or the Pax Dollar. They are essential to the functioning of the crypto ecosystem.

With the digital euro, the ECB is also responding to the growing dematerialization of payments since the Covid-19 crisis. Now, more than 40% of purchases made in Europe in a physical store are paid for with a bank card. Cash is gradually being abandoned by Europeans. Some countries, including Belgium, have also decided to oblige traders to accept electronic paymentswhether through a terminal or a smartphone application.

The digital euro offers a host of benefits, says the ECB. The currency will first allow fight against tax evasion and money laundering. It will guarantee much faster transactions than a traditional bank transfer and will reduce the cost of managing a bank account (replaced by a digital wallet on a smartphone). The digital euro would also offer better security to users thanks to blockchain technology. The ECB has also tested blockchains based on the Ethereum network, such as the private Quorum blockchain.

Deployment in 2026 in Europe

According to the latest news, the digital euro will only be not deployed until 2026. The currency will be available in all EU countries, in addition to the traditional euro. As promised by the ECB, the digital euro will not precipitate the abandonment of cash. It will still be possible to pay with banknotes or coins.

The central bank advances great caution in the design of the digital euro. Initiated in 2020, the project has also given rise to a host of different tests. Cross-border digital transactions have notably been organized between the Banque de France, the Central Bank of Tunisia and the Monetary Authority of Singapore.

At the end of these experiments, the ECB given the green light to the project in 2021. A 24-month investigation phase was then set up by the central bank. It is within the framework of this phase that Amazon, and the four other firms chosen, will have a role to play. The ECB estimates that the investigation phase will end in the first quarter of next year. On the basis of the observations made during these 24 months, the organization will decide on the continuation of the operations. If the results are conclusive, the ECB will then prepare the ground for the issuance of the digital euro by 2026.

The emergence of central bank digital currencies

The ECB is not the only central bank designing its own digital currency. China has taken the lead over the rest of the world by deploying its digital yuan, or e-yuan. In response to Beijing, the US Federal Reserve, the central bank of the United States, is exploring the possibility of issuing a digital version of the dollar. The project has been mentioned several times in recent years, to the chagrin of private banks, who see it as a serious danger to the financial and monetary system. Similar projects have sprung up around the world in recent years, in response to the growing adoption of cryptocurrencies. This is the case in Australia, Singapore, South Africa and Japan.

The rise of these central bank digital currencies regularly raises concerns among civil liberties advocates. Edward Snowdenthe famous whistleblower, also believes that a digital currency issued by a central bank is “ a perversion of cryptocurrency, a crypto-fascist currency” which threatens citizens’ freedom to save. The former NSA employee, for example, fears that central banks will apply negative interest rates to stimulate consumption.

Source :

ECB

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