Green lights for the digital euro project from ECB

The European Central Bank has given the green light to a multi-year project to create a digital version of the euro, according to Reuters.

An electronic equivalent of banknotes and coins, the digital euro will likely be a digital wallet that eurozone citizens can keep at the ECB.

A digital euro aims to be a means of payment that gives holders a claim against the ECB - like banknotes and coins but in digital format. According to Reuters, it will probably resemble an online bank account or digital wallet held directly at the ECB rather than at a commercial institution.

The point of creating a digital euro is the fact that the ECB doesn't want to leave digital payments to the private sector, particularly if the use of physical cash starts dwindling as it has in Sweden.

Regarding timelines, the ECB has given itself two years to finalise the digital euro's design. After that, it will need to be ratified by its Governing Council. If approved, the ECB will work on implementation for another three years before launch. It will also seek legislative changes, as a digital euro was not foreseen by EU treaties.