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ECB President Christine Lagarde invited public commentary on a potential eurozone central bank digital currency (CBDC). "We are still in the review and considerations stage, but we've just launched a public consultation so that consumers and Europeans can actually express their preference and tell us whether they would be happy to use a digital Euro just in the way they use a Euro coin or a Euro banknote knowing that it is central bank money that is available and that they can rely upon." The survey can be accessed here: https://epsilon.escb.eu/limesurvey3/434111?lang=en

ECB Executive Board member Fabio Panetta pleaded the case for a digital euro in a Financial Times op-ed, arguing that, although Eurozone residents already have access to a vast supply of private digital means of payments that make a retail CBDC redundant. He views a digital euro as important to ensure that central bank money remains the trusted anchor of the payment system, to support financial stability and trust in the currency. This is crucial to preserving the transmission of monetary policy and thus protecting the value of money.

Prime Minister Dritan Abazovic, announced that, in collaboration with Ripple and the central bank, the government is starting work on a digital currency or stablecoin for Montenegro. Montenegro uses the EUR, despite not being a member of the Eurozone, although it is a candidate country for European Union (EU) membership.

The European Blockchain Observatory and Forum (EUBOF) published a report identifying and evaluating eight alternative design architectures for the digital euro against the core principles and requirements set by the ECB. It considers how the digital euro will differ based on whether it will account-based or token-based, or whether it's implemented atop existing eurozone-wide payment rails or atop novel technological architectures, such as blockchain. The paper also explores whether a digital euro should be exclusively coordinated by the central bank or distributed and managed in collaboration with Europe's commercial banks and other financial institutions. It addresses interoperability and programmability features, regulatory aspects and end-user experience, along with potential financial stability implications.

I'm still investigating the accuracy of this story, but according to an article in the Spanish press, the Spanish Socialist Party (PSE), the governing political body in Spain, has proposed creating a national digital currency. According to the PSOE, a national digital currency would allow for more active Spain-specific monetary policy, such as providing a more direct mechanism to injecting liquidity directly into the system. However, it is my understanding that the European Central Bank has exclusive rights to issue general purpose currency in the Eurozone, so I'm not sure if this is even legally possible.

The Association of German Private Banks has presented a position paper advocating the establishment of a European digital currency and a common identity standard across the Eurozone.

Covid-19 has led to banknote hoarding in Australia, Brazil, Canada, the eurozone, Russia and the US, fuelled by concerns about financial system stress, according to analysis by Jonathan Ashworth and Charles Goodhart. The data suggests that cash in circulation has surged in a number of countries affected by the coronavirus. Even after the initial March jumps in some countries, subsequent gains have been quite large. The rise likely reflects the use of cash for one of its other traditional functions - panic-driven hoarding.

The European Payments Initiative was launched by 16 European banks. This initiative aims to create a unified payment solution for consumers and merchants across Europe, encompassing a payment card and a digital wallet and covering in-store, online and person-to-person payments as well as cash withdrawals. https://group.bnpparibas/en/press-release/major-eurozone-banks-start-implementation-phase-unified-payment-scheme-solution-european-payment-initiative-epi

The Central Bank of Montenegro (CBCG) is working with Ripple to develop a strategy and pilot program to launch a national stablecoin, in a follow-up to Prime Minister Dritan Abazovic's related Tweet in January. The CBCG will work with Montenegro's government and academia to create a practical digital currency or secure currency solution to test blockchain functionality and potential. Montenegro uses the EUR, despite not being a member of the Eurozone, although it is a candidate country for European Union (EU) membership.

Banco de España (BDE) has chosen two Spanish banks (Cecabank and Abanca) to participate in distributed ledger technology (DLT) based wholesale central bank digital currency (CBDC) tests. The proofs of concept will feature the testing of the processing and settlement of domestic and cross-border interbank payments, and simulating tokenized bond settlements. The BDE has previously noted that this DLT-based wholesale CBDC work is independent of the digital euro project that would cover the eurozone if implemented. Adhara Blockchain will be providing technical services. https://www.boe.es/boe/dias/2024/01/03/pdfs/BOE-A-2024-205.pdf https://www.boe.es/boe/dias/2024/01/03/pdfs/BOE-A-2024-206.pdf

A European Central Bank (ECB) report concluded that governments that don't offer central bank digital currencies (CBDCs) may face threats to their financial systems and monetary autonomy. Consumers and businesses in places that don't have their own digital currency could end up being reliant on a small number of dominant payment-service providers, including foreign tech giants. That could affect the central bank's ability to fulfill its mandate and act as a lender of last resort. https://www.ecb.europa.eu/pub/ire/html/ecb.ire202106~a058f84c61.en.html#toc18

On Tuesday, besides prohibiting anonymous crypto transactions, the EU's executive arm also added anonymous crypto asset wallets to its prohibition list, requiring the full application of AML/CFT rules to ensure complete traceability. This created some confusion as to what exactly the crypto wallets meant here, which the European Commission confirmed is not applicable to non-custodial privacy wallets rather only to exchanges. Indeed, open-source, non-custodial wallets, will not be covered by the prohibition.

"Experts from the euro area national central banks and the ECB participated in the experiments, which were grouped into four work-streams. These work-streams assessed different design features covering four main areas: the digital euro ledger, privacy and anti-money laundering (AML-CFT), limits on digital euro in circulation, and end-user access. The objective was to address the key design questions that had been left open by the Report on a Digital Euro. The experiments were conducted in a multidisciplinary environment and also involved participants from academia and the private sector, without endorsing any specific technical solution."

"The European Banking Authority (EBA) published a report on the platformization of the EU banking and payments sector. In the report, the EBA identifies a rapid growth in the use of digital platforms to 'bridge' customers and financial institutions, a trend it expects to accelerate in line with the wider trend toward the digitisation of the EU financial sector. The EBA believes platformization presents a range of potential opportunities for both EU customers and financial institutions. However, new forms of financial, operational, and reputational interdependencies are emerging and the EBA has identified steps to strengthen supervisory capacity to monitor market developments."

According to a new paper by the Federal Reserve, the US dollar's dominant role in global markets should continue, but that status could be threatened by increased European integration, the continued rapid growth of China, or cryptocurrencies. However, absent any large-scale political or economic changes, it concludes that the dollar will likely remain the world's dominant international currency for the foreseeable future. For example, even with more European fiscal integration, remaining political separation will continue to cause policy uncertainty that would undermine the Euro as a viable competitor. And there are significant roadblocks to more widespread use of the Chinese renminbi, including it not being freely exchangeable, the Chinese capital account being closed, low investor confidence in Chinese institutions and the rule of law. As for cryptocurrencies, the paper's assessment is that it is unlikely that technology alone could alter the landscape enough to completely offset the long-standing fundamental reasons the dollar has been dominant.

The European Central Bank (ECB) announced the members of the Market Advisory Group for the digital euro project. The Eurosystem's High-Level Task Force on Central Bank Digital Currency called for expressions of interest on 14 July, following the Governing Council's approval of the digital euro project investigation phase. After assessing applications, the selection committee appointed 30 senior business professionals with proven experience and a broad understanding of the euro area retail payments market. Meetings are to be held at least quarterly, starting in November 2021, and written consultations will be organised between meetings. The issues identified will also be considered in the Eurosystem's established forum for institutional dialogue on retail payments, the Euro Retail Payments Board (ERPB).

"The ECB is inviting technology experts to take part in online technical talks to explore options for the design of a central bank digital currency. "

"Eesti Pank carried out a research project into the technical possibilities for a digital euro alongside the European Central Bank and seven other central banks of the euro area. The experiment established that a novel blockchain-based solution could in theory support almost unlimited numbers of payments being processed at the same time with  a very large money supply and with a smaller carbon footprint than the card payment system. The blockchain-based solution would also permit a good balance between privacy and the need to meet anti-money laundering requirements."

A digital euro will probably be deemed legal tender, according to European Central Bank Executive Board member Fabio Panetta. "It would be quite awkward not to have legal-tender status for an additional instrument issued by a central bank" though he cautioned that achieving the status "should not be taken for granted."

ECB Executive Board member Fabio Panetta gave a speech outlining how the ECB will structure its work in the investigation phase to ensure that it designs a digital euro that is attractive to consumers.