The cryptocurrency is trampled, the state returns control. The digital euro has frightened Slovaks – what will it bring?

Among the world’s major economies, China is clearly one mile ahead of the development of its own digital currency. Asian giant its digital yuan not only uses, but it also has the means to expand it very quickly in the country.

However, along with the advancement and advent of the digital state currency in China, the reduction or even criminalization of cryptocurrencies and their mining goes hand in hand. Proponents of cryptocurrencies therefore ask whether similar steps await us over time.

The European Central Bank has laid the cards on the table, the digital euro is in preparation

The European Central Bank (ECB) is not hiding from the development of its own digital currency, and last week the Governing Council of the ECB officially launched research phase of the digital euro project. This will take two years, during which the research teams will address the main issues of its design and distribution, which are still not clear at all, as will the final decision on the digital euro.

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The ECB has also stated that the digital euro will not be a substitute, but only a supplement to cash according to its president Christine Lagarde’s goal is to ensure that citizens and businesses in the digital age continue to have access to “the safest form of money,” central bank money.

According to the ECB, the digital euro must meet the needs of Europeans and at the same time contribute to the prevention of illegal activities such as money laundering or terrorist financing, without any adverse effects on financial stability and monetary policy.

There is thus an unmixed package of measures, changes and innovations on the table that have the power to dig into the financial system of the euro as we know it. At present, everything from the form of the digital euro, the involvement of commercial banks or the new powers and opportunities it will bring to central banks is questionable.

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We therefore discussed the development, benefits and risks of the digital euro with analyst Juraj Karpiš, who is a co-founder of the Institute for Economic and Social Analysis (INESS). In a short interview, he explained to us the benefits that the digital euro will bring to the ECB, but also its risks and the possible consequences of the boom in national digital currencies on the cryptocurrency market.

What will you learn in the interview?

  • How the digital euro differs from traditional cryptocurrencies and non-cash money
  • Why the digital euro is actually being created and what is the motivation for central banks
  • Which means the advent of the digital euro for commercial banks
  • Is El Salvador and its adoption of bitcoin an important step?
  • Why in the future so-called “Cryptomen paradises”

Could you describe what the digital euro really is and how it differs from “traditional” cryptocurrencies?

The digital euro, or rather his idea, is a continuation of the trend in central bank policy that emerged after the financial crisis in 2008. After the crisis, central banks felt that they needed to have more control over the financial system.

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The established banking system, ie the central bank and commercial banks, has not developed much in the last 50 years, but this has changed the onset of cryptocurrencies.

They have shown people that it is possible to create digital money without the need for a certain central authority and at the same time make immediate payments efficiently. Thus, central banks are worried that their biggest “clients” will switch from classic fiat money to cryptocurrencies, so they are trying to put something like the digital euro together.

However, unlike most cryptocurrencies, the design of the digital euro, or any “state cryptocurrency”, is fully centralized and does not offer benefits like some cryptocurrencies.

What is the difference between the digital euro and “traditional” non-cash money?

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