One of the most well-known use cases for cryptocurrencies is enabling instant cross-border payments. This is why the Central Bank Digital Currency (CBDC) initiative has attracted hundreds of jurisdictions around the world, with some countries like China already linking the technology to their central banks.
Likewise, the European Central Bank (ECB) is currently in the CBDC investigation phase and has choose Five companies built prototypes for testing. It includes e-commerce giant Amazon, Italy’s famous banking center Nexi and Spanish multinational financial services company CaixaBank. The remaining two include the European Payments Institution (EPI) and the French payment channel Worldline. The ECB selected the five tech companies among 50 other front-end developers that responded to the ECB’s April call.
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Each company will build a different prototype for the use case of the digital euro. Notably, no company will use the developed interface after testing, and companies willing to integrate will develop new interfaces, the ECB said.
The ECB is currently in the two-year investigation phase
Although the ECB joins the list of advanced countries benefiting from the technology, it could take nearly five years for its digital euro to hit the market. It is currently passing through the investigation stage and no formal decision has been made on the launch of a digital bank currency. The investigation phase expires in October 2023, and officials expect to conclude the investigation in the first quarter of this year.
A tech agency based in Frankfurt, the European financial center, expressed his views on the proposed prototype Add to,
The purpose of this prototyping exercise is to test how well the technology behind the digital euro integrates with the prototype developed by the company.
Each company develops applications for different use cases
Payment medium Worldline will work to prepare the transfer of digital euros between individuals. Likewise, CiaxaBank will build a mobile app to test the transfer of digital euros to banks and other public payment channels.
Likewise, Nexi Group has expressed strong interest in the project, which will develop prototypes for digital payment transfers at the retail level. The European Payments Association will follow a similar development. Nexi Chief Strategy Officer, Roberto Catanzaro, Add to in a statement;
We look forward to bringing Nexi’s recognized best-in-class expertise in digital payments, and more specifically in merchant solutions, to drive innovation in European payments.
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The Amazon vice president noted in an email expressing his intentions for a CBDC;
The future will be built on new technologies that enable modern, fast and cheap payments.
The world’s reaction to the potential of central bank digital currencies and certain institutional developments has drawn ECB officials to explore if or when the central bank could publish the euro in its digital form. In September 2021, the European Central Bank established a series of groups to examine digital payments. The groups concluded that the use of digital currency in online marketing and in traditional stores would be a key feature of the euro.
Featured image from Pixabay and chart from TradingView.com