ECB slow-pedals the digital euro while the Euro Coin is fast-tracked to Solana
(Kitco News) - European Central Bank (ECB) President Christine Lagarde has announced that the European Commission intends to release a legislative proposal on a digital euro in the near future. Lagarde made the remarks at the “Towards a legislative framework enabling a digital euro for citizens and businesses” conference on Monday.
“The timely adoption of a legal framework for the digital euro would give all stakeholders the necessary legal certainty to prepare for its possible introduction and send a strong signal of political support,” Lagarde said. “I'm very much looking forward to the legislative proposal for establishing a digital euro, which the European Commission will propose shortly.”
The digital euro is intended to be a central bank digital currency (CBDC) that serves the European Union. The two-year exploration process into its creation is scheduled to conclude in September 2023.
According to ECB executive board member Fabio Panetta, the central bank is currently exploring the possibility of placing transaction and store-of-value limits for individuals who use the digital euro.
The idea is being explored while the project is still in its investigation phase at the ECB, with Panetta indicating that a store-of-value limit of €3,000 and a monthly limit of 1,000 transactions are currently being discussed. The executive also mentioned a possible €50 cap on transactions, citing anti-money laundering provisions.
Risks to the financial stability of the EU during times of crisis were highlighted by Panetta as the reason for these precautionary measures.
“If we give access to a means of payment, which is relatively limited, there are no transaction costs because you only need to have a smartphone,” Panetta said. “There will be risks that people could use this possibility to move, for example, their deposits of other banks or their money out of financial intermediates.”
Some have pushed back against the limits, including Christian Lindner, the German minister of finance, who questioned: “whether people would accept €50 as they can pay in cash hundreds and more.” He suggested that the ECB “should introduce a digital euro that is really accepted by people and not only by policymakers.”
With Lagarde indicating that a legislative proposal will be released in the near future, it's looking increasingly likely that the digital euro will eventually become a reality at the conclusion of the exploratory phase next September.
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The private sector takes the lead on a Euro Coin
While legislators slow-walk the creation of a digital euro through parliament, the private sector has stepped in to take the lead. Circle, the crypto payments company which specializes in the creation of stablecoins, has announced plans to add support for the Euro Coin (EUROC) on the Solana network in the first half of 2023.
EUROC is a fully collateralized stablecoin that was originally launched on the Ethereum network in June 2022.
Marcus Boorstin, Circle’s director of engineering, spoke about the Solana-based EUROC during a presentation at the Solana Breakpoint conference in Lisbon, Portugal, saying that “there's already a lot of enthusiasm from the ecosystem” for the launch.
According to Boorstin, the cryptocurrency exchange FTX will support Euro Coin deposits and withdrawals on Solana at its launch, and Solana-based decentralized finance protocols Radium and Solend have “announced their intent to do so as well.”
Boorstin said that integrating the Euro Coin on Solana will be facilitated by Circle’s newly-developed Cross-Chain Transfer Protocol, which enables developers “to build seamless user experiences for sending and transacting USDC natively across blockchains.”
“The availability of Euro Coin on Solana unlocks new use cases for instant FX, provides optionality for traders with a new base currency, allows for Euro Coin lending and borrowing and will be available alongside USDC as a payment currency in Solana Pay,” said Sheraz Shere, Head of Payments at Solana Labs. “Stablecoins such as Euro Coin on fast, efficient chains with near instant settlement like Solana will be the future of banking and fintech.”
The permissionless Cross-Chain Transfer Protocol is scheduled to launch on Ethereum and Avalanche in early 2023, and is expected to expand to Solana in the first half of 2023.