European Parliament: Digital Euro Might Face Challenges in Non-euro Member States

The European Parliament’s Economic Governance and EMU Scrutiny Unit has recently conducted a review of the potential challenges the digital euro might encounter in non-euro member states.

According to the report, the start of any arrangement between the European Central Bank (ECB) and non-euro area national central banks will have to be preceded by an international agreement between the European Union and the third country.

Erwin Voloder, Head of Policy at the European Blockchain Association, told The Block that CBDCs are closed loop data cycles, and thus will need at least data sharing agreements between countries.

These agreements, he states, come with legal questions as to the usage, wallets, and jurisdiction, yet no working solutions are currently known.

Despite the political will for an arrangement within the bloc, operational and monetary law challenges remain in finding a resolution.

As such, in July 2021, the ECB launched the investigation phase into the digital euro project.

This investigation, ultimately aiming to resolve key design and distribution issues, will conclude in October 2021, at which point a decision on whether to move on to the next phase of development and testing will be made.