ECB starts 24 month digital euro project.

[Lucius]

With other countries seriously considering this direction, the EU has finally start its Digital Euro (CBDC) project. It will take them 2 years to explore the potential of such a currency, and if they decide to actually apply it, they say it would take them at least 5 years to officially launch it. As an EU resident, I am not particularly excited about this, because I know that it will take them much more than 5 years to do anything, and all that time will come in handy for Bitcoin to become more mainstream in EU.

What interests me more is whether the EU will at some point start making some bad moves when it comes to Bitcoin or stablecoins, which they obviously consider competition (although they don't explicitly mention Bitcoin). Of course, this reasoning stems from the assumption that China decided to conduct a final battle with Bitcoin precisely because of its CBDC, which is already being tested on a large sample of people.

Today the Governing Council of the European Central Bank (ECB) decided to proceed with a 24-month central bank digital currency (CBDC) project to investigate the potential of a digital euro. Even if it decides to go ahead with a digital euro, the ECB President has previously stated it would take five years to launch.

While no decision has yet been made whether to issue a digital currency, the ECB and European national central banks have outlined several motivations over the last year or more. The first, as Lagarde stated, is to ensure that as cash usage declines, there is still central bank money but in a digital form. Without a CBDC, there’s a risk that private digital currencies, including stablecoins, will dominate, and they still might. Such a scenario would make it harder for the central bank to control monetary policy, maintain financial stability, ensure low cost payments and enable financial inclusion.

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[Charles-Tim]

As an EU resident, I am not particularly excited about this, because I know that it will take them much more than 5 years to do anything, and all that time will come in handy for Bitcoin to become more mainstream in EU.

Why not excited? Bitcoin is not existing for competition, it is an alternative which also gives privacy. Bitcoin is also an asset, not existing to substitute fiat but as a safe haven and for wealth creation.

What interests me more is whether the EU will at some point start making some bad moves when it comes to Bitcoin or stablecoins, which they obviously consider competition (although they don't explicitly mention Bitcoin).

China is a country controlled only by a single president, Europe is not controlled by a single president. China is a country, Europe are countries and each country is independent. China even ban foreign social media, European countries accept all these social media. China like to act like they are a world on their own, Europes are different, the reason they are part of Western nations. Many countries in Europe are even Bitcoin friendly, China has never been Bitcoin friendly. European countries still gives more freedom to citizens unlike China.

[o_e_l_e_o]

Such a scenario would make it harder for the central bank to control monetary policy, maintain financial stability, ensure low cost payments and enable financial inclusion.

"Financial inclusion"? Please. Bitcoin is the essence of financial inclusion. Don't have good ID? Turned down for a bank account. Don't have a fixed address? Turned down for a bank account. Bad financial history? Turned down for a bank account. None of that matters with bitcoin. Install a wallet, done. No fiat or CBDC will ever be as financially inclusive as bitcoin is. And "control monetary policy" is a nice way of saying "print more money". We've all seen the chart showing USD losing >95% of its value in the last 100 years. Now here's the one for EUR - https://www.statista.com/statistics/1055948/value-euro-since-2000/. A cool 30% lost since its creation ~20 years ago. As the article points out, they are worried that the majority of the population will move to using bitcoin or other cryptocurrencies, which directly impacts on their ability to bail out themselves and their friends and prop up their rigged markets indefinitely.

This has nothing to do with maintaining "financial stability", and everything to protecting their own vested interests.

[amishmanish]

Such a scenario would make it harder for the central bank to control monetary policy, maintain financial stability, ensure low cost payments and enable financial inclusion.

"Financial inclusion"? Please. Bitcoin is the essence of financial inclusion. Don't have good ID? Turned down for a bank account. Don't have a fixed address? Turned down for a bank account. Bad financial history? Turned down for a bank account. None of that matters with bitcoin. Install a wallet, done. No fiat or CBDC will ever be as financially inclusive as bitcoin is.

So true. When it comes to the developed nations, the term "financial inclusion" actually mean the set of entities they want to keep "financially excluded". When someone like Jack Mallers talks of financial inclusion, he is actually talking about giving people with bare minimum resources access to a savings account. The latter is an actual ethical stand while former is just wielding control.

As the article points out, they are worried that the majority of the population will move to using bitcoin or other cryptocurrencies, which directly impacts on their ability to bail out themselves and their friends and prop up their rigged markets indefinitely.

They actually are worried that stablecoins will take over. Right now, most stablecoins are only used for crypto trading. They seem to be pre-empting a scenario where crypto actually begins to be used on a wide scale. With the example of El Salvador, they are truly frightened that they won't have any option to dangle before these poor nation-states as "Oh, look! We've "researched" this CBDC technology for 24 months and are giving it to you free, Use it, not Bitcoin"

I bet if today they had the logistics ready, they'd probably call up every head of state contemplating usage of LN and Bitcoin and give them the offer. The implications for this are huge though. Does anyone believe that these powerful bodies will simply give up all that leverage and power that comes from controlling the financial infrastructure? Honestly, I feel concerned about what their real pushback look like. Currently, its just baby gloves with the FUD and regulations.

[20kevin20]

They'll probably conduct some kind of policy that'll make people get away from Bitcoin. The UK already has a very draconic crypto law and worse is possible to happen at any time. Just make it a pain in the ass to calculate your taxes and to declare your gains/losses and enough will sit on the side rather than joining the game.

As o_e_l_e_o said, they're afraid of us because no matter who was the guy/team who released BTC, since its existence the world finally has one way of going off-grid without an authority checking up on you. No matter who you are and what you've done, you ain't discriminated.

[Sterbens]

I'm not too sure about the idea of launching that EU did and later on it will be far behind. considering the rapid growth of crypto, while the EU still has to wait 5 years to become viable in the market. like you said, they are trying to be competitors without saying it outright. but will it be in vain when cryptocurrency is already 1000 steps ahead of the EU regarding its Digital Euro program?

[o_e_l_e_o]

They actually are worried that stablecoins will take over. Right now, most stablecoins are only used for crypto trading. They seem to be pre-empting a scenario where crypto actually begins to be used on a wide scale.

I don't think stablecoins will ever take over. Bitcoin might, but not stablecoins. Since every stablecoin is based on fiat and claims to be backed up with fiat, then they all inherit all the same problems as fiat has - centralized, inflationary, seizable, not private, not censorship resistant, etc. On top of all that, you add in a further centralized third party (the stablecoin issuer), and all the risks that that brings - insolvency, fractional banking, scams, hacks, etc. Stablecoins really are the worst of both worlds. I'd rather use a CBDC than a stablecoin.

I think they are actually worried about bitcoin. It is bitcoin which has all the features they fear, and which has the widest use, widest adoption, widest user base. And after all, if they really wanted they could just seize all the fiat belonging to a stablecoin issuer and destroy that stablecoin literally overnight.

[Coyster]

With other countries seriously considering this direction, the EU has finally start its Digital Euro (CBDC) project. It will take them 2 years to explore the potential of such a currency, and if they decide to actually apply it, they say it would take them at least 5 years to officially launch it. As an EU resident, I am not particularly excited about this, because I know that it will take them much more than 5 years to do anything, and all that time will come in handy for Bitcoin to become more mainstream in EU.

Whilst that is very much possible, the question, or rather concern is what damaging measures the different governments (countries) that make up the European Union will take within this next five years and definitely more as they work on their CBDC's. There will prolly be tighter regulations as well as policies initiated to discredit Bitcoin as not being safe, reliable...or whatever compared to their CBDC's, obviously before CBDC's come on board, Bitcoin would have gone a very long way, my only concern is actually how many users will be convinced and cajoled into believing some of the lies the government will cook up to try and see if CBDC's will be more used than Bitcoin.

I think they are actually worried about bitcoin. It is bitcoin which has all the features they fear, and which has the widest use, widest adoption,

Isn't that were they are making a mistake, should CBDC's which are centralized be launched in 'reaction' to Bitcoin, I mean, we all know Bitcoin is decentralized, and not just that, there's freedom and control to use your funds just the way you think is right, but the digital dollar, Euro, Yuan, or any centralized digital (shit) coin is actually the opposite of that, should the government not actually be 'trying to stop' Bitcoin with more regulations (I know sooner or later they'll run out of it), rather than creating digital currencies that will work (and be printed) almost in the same way as their fiat currencies

[LoyceMobile]

Haven't they been "exploring" this for like the past 5 years already?

[tyz]

Haven't they been "exploring" this for like the past 5 years already?

Yes, they have been looking at it for quite a while and now seem to have come to a solution, but no idea what to make of it.

The Euro itself is a failed project. Everyone who is not ideologically blinded can see that. It won't get any better if they now introduce an e-Euro on a centralized blockchain and thus shift even more power away from the banks to the central bank. The Euro has failed, with or without blockchain.

[Ozero]

There is no doubt that at the stage of preparing for the release of the digital euro, they will seriously tackle the regulation of the circulation of cryptocurrency and private, commercial stablecoins, as the government of China is doing now. It's just that China has already come to this point, and Europe is at least five years behind them. However, this may happen earlier, already now some EU officials are calling for stricter regulation of the cryptocurrency.

[Wind_FURY]

With other countries seriously considering this direction, the EU has finally start its Digital Euro (CBDC) project. It will take them 2 years to explore the potential of such a currency,

I believe in that 2 years, they’ll discover the truth for themselves. That there’s nothing that they can do to put the genie back in the bottle. The invention of Bitcoin has opened a Pandora’s Box with new possibilities. It definitely WILL BE harder for the central bankers to control the monetary system, but they did that to themselves.

[worle1bm]

Many nations are in similar hoard to develop their CDBC and exploring the concept of blockchain for the same purpose and hiring cryptography experts but it will take long time to build it like you said for more than 5 years at take for EU to launch their digital euro.At that time we can expect that btc already be used on local stores and you just scan a qr code and simply make LN use and payment is done.They are stepping into digitalization but still it will be center oriented and you can still be denied Authorization of your funds through these but on the other side btc will provide you financial support and privacy at the same time and it will your funds.This time it is alternate to fiat but in future the condition will be reversed so wait for that.

[amishmanish]

I think they are actually worried about bitcoin. It is bitcoin which has all the features they fear, and which has the widest use, widest adoption, widest user base. And after all, if they really wanted they could just seize all the fiat belonging to a stablecoin issuer and destroy that stablecoin literally overnight.

I meant the same oeleo but didn't quite came out right. That is why quoted the El Salvador example..LOL. It is interesting that the banks always refrain from naming Bitcoin directly and just use the label "Private Digital currencies". I wonder if a jury was to deliberate on this in any of the presumably great democracies, would they classify Bitcoin as Private? Can Open Source Software be labelled as "Private"?

If not, then what do they have against Bitcoin. They may label everything else which is a foundation/ corporation coin (ETH, ADA etc) as private, but not Bitcoin.

The only thing that needs to be adjudged is that should state have the sole authority to judge what money is or how people exchange value? Going openly against Bitcoin is like going against democracy and freedom to choose. This is why they will continue to be subtle in undermining Bitcoin. Of course not so much in Russia, China or third world countries.

I believe in that 2 years, they’ll discover the truth for themselves. That there’s nothing that they can do to put the genie back in the bottle. The invention of Bitcoin has opened a Pandora’s Box with new possibilities. It definitely WILL BE harder for the central bankers to control the monetary system, but they did that to themselves.

That is the most logical course that things should take. Though it takes one back to the same question. How far will nation-states go in their pursuit to suppress bitcoin and stop it from loosening their grip on power?

[o_e_l_e_o]

should the government not actually be 'trying to stop' Bitcoin with more regulations (I know sooner or later they'll run out of it), rather than creating digital currencies that will work (and be printed) almost in the same way as their fiat currencies

Maybe they've realized they can't. They can regulate centralized exchanges as much as they want, but they can't stop people trading peer to peer. They can force KYC on every online exchange, service, and web wallet, but they can't stop people from mixing their coins and holding them themselves. They can force some mining pools to exclude certain "blacklisted" transactions, but they can't force every mining pool to do that (not least of all the ones in other jurisdictions). They can force payment processors like BitPay to collect KYC and track their customers, but they can't stop merchants from just accepting bitcoin directly. I'm sure they will continue to pass ever more ridiculous regulations, but nothing they do can stop me from holding bitcoin myself and sending it directly to another party in exchange for goods or services.

So perhaps they hope that by launching CBDCs they can simply entice people away from bitcoin altogether, rather than regulate against it.

[Lucius]

Why not excited? Bitcoin is not existing for competition, it is an alternative which also gives privacy. Bitcoin is also an asset, not existing to substitute fiat but as a safe haven and for wealth creation.

Why would I be? Well CBDC is nothing but a digital fiat whose only advantages I see is that there would no longer be a need to produce banknotes and coins, transport and insure physical money. It remains a centralized and even more controlled means of complete control over one's finances.

China is a country controlled only by a single president, Europe is not controlled by a single president. China is a country, Europe are countries and each country is independent.

I put China in this context only because of the link to their CBDC and the fact that its launch coincided with the banning of crypto mining - it is logical to ask whether the EU might be able to introduce some similar measures (though perhaps not so drastic) before introducing the digital euro. China is not a dictatorship in the sense that it is ruled by one man, but by the Communist Party - that one man at its head is only formally the strongest figure.

We can discuss the fact that every country within the EU is independent, but you should know that 70% of all laws are passed in the EU Parliament and are only confirmed at the level of member states - small states have almost no influence - I say this from the experience of my country which accepts everything (even laws that harm national interests) because it has no mechanisms or responsible political leaders who want the best for their people.

Many countries in Europe are even Bitcoin friendly, China has never been Bitcoin friendly. European countries still gives more freedom to citizens unlike China.

That's true, many EU countries have very good laws when it comes to cryptocurrencies, but that doesn't mean there won't be changes - they are on the way and coming for sure, it's just a matter of time.

Europe is Considering Crypto Regulation

This has nothing to do with maintaining "financial stability", and everything to protecting their own vested interests.

Of course, it has nothing to do with what they cite as the main problems, because as you wrote, the EUR is on the same path as the USD, and over time it will lose its value - these pandemic measures will only further accelerate the process. The fear of losing control of the financial system has always been the biggest problem of the governing structures that govern the people through it. A man who is his own bank and absolutely controls his finances is the nightmare of every banker and politician.

[o_e_l_e_o]

Well CBDC is nothing but a digital fiat whose only advantages I see is that there would no longer be a need to produce banknotes and coins, transport and insure physical money.

You would hope, given that the entire currency is both digital and centralized, they could also finally figure out how to make transfers between bank accounts in less than the 3 to 5 days we have to wait at the moment for some wire transfers.

Of course, it has nothing to do with what they cite as the main problems, because as you wrote, the EUR is on the same path as the USD, and over time it will lose its value - these pandemic measures will only further accelerate the process. The fear of losing control of the financial system has always been the biggest problem of the governing structures that govern the people through it.

Perhaps, as an EU citizen, you can provide your opinion on the following: Are the stakes that bit higher in the EU compared to the US? Should there be a complete collapse of our monetary system and USD becomes worthless, then obviously the fallout will be massive, but at the end of it, I would still expect the United States to exist with all 50 states. However, if the Euro collapses, can we say the same about the fate of the EU itself? Would the collapse of the Euro lead to the collapse of the EU?

[bitmover]

Without a CBDC, there’s a risk that private digital currencies, including stablecoins, will dominate, and they still might. Such a scenario would make it harder for the central bank to control monetary policy, maintain financial stability, ensure low cost payments and enable financial inclusion.

This makes absolute no sense at all.
Monetary policy is controlled by the central bank by raising or lowering the basic interest rate of the economy. This has nothing to do with CDBC or Stable coins.

There are also several ways to control stable coins. They are all backed up by real fiat/EUR. Those companies can be easily forced to have a limited supply or just face lots of fines or something like that, for example.

People in cryptospace are overestimating what stable coins can really do. Stable coins are just a private debt, people lend 1 USD to binance and receive BUSD back, because binance promises to pay back 1USD for each BUSD.

I think an EURO CBDC is going to happen not because they are affraid of stable coins, but because it is the evolution of money. It will be a better form of money, which will in long term bring benefits to the economy as it is faster and cheaper to transfer.

Edit: The only cryptocurrency which would really affect central banks to control monetary policy is Bitcoin.

[Wind_FURY]

I believe in that 2 years, they’ll discover the truth for themselves. That there’s nothing that they can do to put the genie back in the bottle. The invention of Bitcoin has opened a Pandora’s Box with new possibilities. It definitely WILL BE harder for the central bankers to control the monetary system, but they did that to themselves.

That is the most logical course that things should take. Though it takes one back to the same question. How far will nation-states go in their pursuit to suppress bitcoin and stop it from loosening their grip on power?

VERY FAR. That’s why it’s to the utmost importance that Bitcoin is given the ability to scale out in order to decentralize further, and over-shoot security. Then what design-decisions should the Core developers make? Smaller blocks, layered protocol.

[Lucius]

Perhaps, as an EU citizen, you can provide your opinion on the following: Are the stakes that bit higher in the EU compared to the US? Should there be a complete collapse of our monetary system and USD becomes worthless, then obviously the fallout will be massive, but at the end of it, I would still expect the United States to exist with all 50 states. However, if the Euro collapses, can we say the same about the fate of the EU itself? Would the collapse of the Euro lead to the collapse of the EU?

This is the question of all questions when we talk about the common currency in the EU (EUR), compared to the US and the US dollar. The stakes, in this case, are incomparably higher than in the US in every sense, because you yourself well conclude that the eventual collapse of the US dollar will probably not affect the collapse of the US as it exists today, but the collapse of the euro would have terrible consequences for the EU.

You probably remember the Greek crisis that started around 2010 (depending on the source), which resulted in the largest attempt to save a country in the eurozone so far, and estimates say that it cost around 320 billion EUR, which puts Greece in the position of a certain debt slavery at least until 2060. Everyone may wonder if it was justified to save Greece or let it sink, but there was no doubt from Germany at the time - I think they would pay much more to save Greece (and thus the eurozone and the euro), just to save the idea of how the EU can actually function in the form in which it now stands. You can read a much better and more detailed explanation that can give you some answers to your question in this article.

While the EU may seem compact from afar, for those of us who live here it is far from it - there are several large states whose influence actually controls all important decisions, and the UK did not like it, as some other members do not like it - especially Hungary, which is trying to pursue some kind of sovereign policy within the EU, so it has been called a rogue member state for some time.

The UK had big problems with leaving the EU despite not being part of the eurozone (luckily for them), but any other country that would try to leave would face a big problem in that case - the exit ticket has a lot of zeros, for many states hard to reach amount. The most important task that EU bureaucrats are currently focused on is not to allow some new Brexit, because regardless of some new countries waiting to become members, another exit of an important member state would be the beginning of the end.