The Eu Will Adopt Legislation Next Year To Plan For A Digital Euro

The sand dollar, as it is known, would improve financial inclusion for the country’s 700 islands residents, who do not always have access to banking services such as cash machines

Fees for wiring money can amount to as much as 7% of the transactions value, according to the World Bank, and lowering them to 2% could improve remittances to low-income nations by $16 billion per year

The financial sector has the potential to be transformed by digital money. This drastic shift will benefit emerging markets and low-income countries the most. 1.7 billion individuals without traditional bank accounts could benefit from widespread and low-cost access to digital money and phone-based transactions

According to Politico, the European Commission announced Wednesday that it will present a measure to implement a digital euro in early 2023.The European Central Bank (ECB) is already testing the digital euro, and a prototype is scheduled to be ready by the end of next year.

A digital euro could be ready as early as 2025 if somehow the European Union agrees to create one. The European Union’s central bank digital currency (CBDC) would be a digital euro, which many countries, including China, are already exploring.

1.7 Billion Individuals Without Traditional Bank Accounts Could Benefit From Widespread

The emergence of other CBDCs, privately-backed cryptocurrencies like the Meta-backed Diem and Bitcoin, has European politicians concerned that demand for their currency may be harmed.

In November, ECB Executive Board member Fabio Panetta advocated for the introduction of the digital euro, saying, If They don’t meet this demand, others will.

The financial sector has the potential to be transformed by digital money. This drastic shift will benefit emerging markets and low-income countries the most. 1.7 billion individuals without traditional bank accounts could benefit from widespread and low-cost access to digital money and phone-based transactions. Furthermore, countries may become more interconnected, making trade and market integration easier. The ramifications in the actual world are enormous.

However, there is always a risk associated with any chance. Those on the other side of the digital divide may be shut out of this new world. It also invites fragmentation, currency substitution, and a deterioration in policy efficacy. The change must be effectively managed, coordinated, and regulated.

Consider the situation of a worker in the United States. A business may transfer a worker’s paycheck into a digital wallet in the near future, allowing her to transmit money to family in Guatemala, the Philippines, or any other country more cheaply and efficiently. Fees for wiring money can amount to as much as 7% of the transactions value, according to the World Bank, and lowering them to 2% could improve remittances to low-income nations by $16 billion per year.

This is a not-too-distant future. In the field of mobile money, private sector innovation in emerging markets has already made an impression. M-pesa, a mobile money transfer service that originated in Kenya, is now used in dozens of African and Asian nations. It has enabled many people without bank accounts—but with a flip phone in their pocket—to make payments, as well as provide access to other financial services such as savings and credit products.

Today, there are one billion registered mobile money accounts in 95 countries, with daily transactions totaling about $2 billion. Sub-Saharan Africa is the global leader in mobile money, with over half of all mobile money accounts. This has been made possible by the increasing use of mobile phones. Another key innovation is digital IDs, which have been implemented in several nations. Mobile money providers can onboard users at a cheap cost while adhering to local requirements thanks to these digital equivalents of passports.

ALSO READ: What is the future of Digital Euro?

Improve Financial Inclusion For The Country’s 700 Islands Residents

In emerging markets, the government is also working to establish a digital payment infrastructure. The Bahamas has the world’s first central bank digital currency (a digital representation of a country’s money). The sand dollar, as it is known, would improve financial inclusion for the country’s 700 islands residents, who do not always have access to banking services such as cash machines.

Other countries aren’t far behind the United States. China’s central bank is leading the most ambitious effort. If the e-Renminbi experiment succeeds, it might enhance digitalization, innovation, and financial inclusion in one of the world’s largest and most vibrant economies, potentially inspiring other countries to do the same.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing