According to reports released on Friday, the European Central Bank (ECB) will decide later in the year whether to develop the fiat currency in the specified format. Prototypes of the digital euro have been completed. The ECB says the potential central bank digital currency (CBDC) could be designed to boost innovation. However, he seems skeptical about using Web3-style distributed ledger technology and smart contracts.
“Studies show that it is possible to seamlessly integrate the digital euro design into existing payment environments, while the currency paves the way for innovative approaches and technologies,” said Fabio Panetta, member of the Central Bank Executive Board, in a letter to Irene Tinagli in the European Parliament. uses expressions. At the same time, the digital euro is emerging as a response to Facebook-owned currency Libra. ECB prototypes are creating controversy due to the involvement of another tech pioneer, Amazon. EU lawmakers are calling for a U-turn in the plans. Panetta downplays Amazon’s involvement, saying the prototypes are “a lab experiment that should not be thrown away and used any longer.”
Distributed ledger technology is rejected in the back-end design of the prototype developed by the Central Bank. Instead, a centralized model based on unspent transaction output (UTXO), which is also used in crypto transactions, is preferred. According to the ECB report, the UTXO system supports different types of payments while maintaining privacy, while also providing fast and efficient verification of transactions. The report adds that the system allows conditional payments to be made without the presence of smart contracts popular in decentralized finance. The European Commission is expected to publish a bill covering privacy measures and other important issues on the digital euro next June. But lawmakers continue to voice their skepticism about the benefits of CBDC.