The introduction of digital crypto assets such as Bitcoin in 2008, as well as the underlying distributed ledger technology (DLT), has encouraged central banks throughout the world to contemplate digitising the monetary system and adopting central bank digital currencies (CBDCs), as reported by Cointelegraph.
The Bank of England was a trailblazer in this movement, considering the introduction of its own CBDC as early as 2014. In recent years, the notion has gained traction, with Meta (previously Facebook) declaring in the summer of 2019 that it would develop a digital DLT-based global crypto asset backed by a variety of fiat currencies and government bonds.
Furthermore, in public discourse, DLTs, such as blockchain technology (a subset of DLTs), are widely regarded to be the technological underpinning for digitising the monetary system and implementing a CBDC. Asset supply and payment can be organised on integrated platforms, which is a big advantage of using DLT, Cointelegraph noted.
Furthermore, DLTs, such as blockchain technology (a subset of DLTs), are commonly considered in public debate as the technological foundation for digitising the monetary system and instituting a CBDC. The ability to organise asset supply and payment on integrated platforms is a significant benefit of using DLT, stated Cointelegraph.
The digital euro issued by the European Central Bank would remain a euro (digital euro coin and notes). It would function in the same way as banknotes, but it would be a digital currency issued by the Eurosystem (the European Central Bank and state central banks) and accessible to all residents and enterprises. Furthermore, a digital euro would be a complement to cash rather than a replacement for it. The Eurosystem will continue to ensure that cash is available throughout the Eurozone.
Smart contracts and peer-to-peer (micro) payments between machines, for example, can be implemented in euros without the usage of volatile and/or unregulated crypto assets. Smart contracts would enable Internet of Things (IoT) objects linked to the DLT, such as machines, vehicles, and sensors, to provide pay-per-use services. A DLT-based payment system is thus particularly promising in the context of the machine economy.
DLT is also well-suited to provide a computer chip and, as a result, a digital wallet to millions of IoT devices. Devices would be able to send digital euros directly from wallet to wallet and receive and send money on their own.
(With insights from Cointelegraph)
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