The European Central Bank announced on Wednesday that it will advance its plan to develop a digital euro, making the 20 country eurozone one of the pioneers among major economies considering introducing digital currencies.
This decision will initiate a two-year 'preparatory stage', but it does not mean that a digital euro will be launched, and decisions regarding the latter are likely to be made separately by European governments.
For Europe, a major attraction of the digital euro is to strengthen the region's autonomy. Europe lacks local alternatives to American bank card payment systems such as Mastercard and Visa. This makes the European continent dependent on foreign suppliers for a critical infrastructure, which is being closely monitored in the context of the Ukrainian war and tense relations between China and the West.
Decision makers hope that the digital euro can stimulate European companies to innovate and create new digital products, potentially challenging American giants such as PayPal. European companies and consumers may also benefit from lower transaction costs compared to American bank card suppliers.