The European Union is using the crash of TerraUSD (UST), a stablecoin that had the highest market capitalization, to promote its Central Bank Digital Currency (CBDC).
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Speaking at an event at the National College of Ireland, executive board member of the European Central Bank (ECB) Fabio Panetta said the ECB's CBDC testing phase will begin in 2023, with the full rollout planned for 2026. Member countries will be allowed to test the Digital Euro for three years before it can be publicly used.
According to Panetta, an ECB-backed digital euro, if used as legal tender in all EU member states, could boost the economy. But its rollout will not mean the end of cash, which is currently only used in 20% of transactions.
“We will ensure that cash remains available. But if the current trend continues, we could face a future in which cash loses its central role and its ability to provide an effective anchor as consumers turn to digital means of payment,” he said.
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Panetta argued that the digital Euro could help fiat remain relevant as it would “maintain its role as a monetary anchor in the digital age.”
“Digital money issued by the central bank would offer the possibility for everyone to use public money for digital payments. It would be a sound, reliable means of payment designed in the public interest. And it would preserve the coexistence of sovereign and private money that has served us well so far,” he explained.