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There have been a lot of misinterpretations when it comes to the idea of decentralization and its adoption in the current world of finance. With many professionals, market analysts, as well as active traders, repeatedly backfiring on decentralization and the adoption of crypto but that is now considered talk of the past because many cryptocurrencies are being adopted not only into the financial paradigm but also in a conventional sense as people are gravitating towards the use of cryptocurrencies such as Bitcoin, Ether, and XRP and the trend seems to be kicking off to great heights.

As a matter of fact, those financial institutions, enterprises, and banks that completely ridiculed the idea of decentralization and cryptocurrencies back in the day are now very much wanting to launch their own distributed ledger technology and crypto coins that have a mixed sensation of being centralized. This is so they can have all the control over it, but at the same time, some aspects of decentralization, such as the use of blockchain technology and streamlining of the transactions, are also being added into the mix.

These tokens that are being generated or developed across the world are known as central bank digital currencies, and many countries have already started testing their legitimacy and how effective those could be in the long run. One such project that is underway and is being worked on is the digital euro project. The very purpose of this project is to provide European people with access to a more streamlined and acute decentralized digital Ledger, which would allow them to make transactions in real-time in the form of digital Euro.

The technology and the execution of this project are bottom lines fundamental because it is not like a completely new token that is being developed, but it is the same Euro that people use on a daily basis that would be converted into a digital counterpart and be used to make transactions over blockchain technology in real-time, think of all the performance and simplicity that this project will be bringing into the lives of the people.

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It would become more secure, will be generally acknowledged, and the most significant aspect of this whole crusade is that there would only be a minimal fee applied to each transaction as opposed to making transactions in cryptocurrencies that use crypto exchanges and their associated technologies to execute a transaction. Furthermore, we will be exploring many aspects of the digital Euro project and the overall impact that it would be having on the European financial system.

Current Financial System

To be able to navigate through the potential changes the digital euro project will be bringing to the modern financial decree soon enough it is important to understand the present financial system that is currently employed in the flesh. The type of money that the current monetary system use across the board is paper cash, central bank reserves, and the bank’s own money. The physical cash that is also known as fiat currency is the very basis of the present financial system in place, and all these central banks have the authority to print the cash and make it available into circulation.

It was 1970 when the gold standard as the Fiat circulatory asset was absolved and paper money took its place, and these were the central banks who were put in charge of generating this currency via lending activities and or the purchase of certain assets such as government bonds.

The very term ‘Fiat’ comes from Latin, and its meaning is ‘let-there-be-money,’ and it only represents the very ability of central banks to be able to produce money at will. There are no restricting factors whatsoever, if central banks are in need to print new cash, they do so, but the only limiting aspect is that they can’t print more money than the present gold reserves that they have, or otherwise, there is a chance of the country’s economy pushing itself to absolute plummet. Another factor that can trigger the printing of more Fiat money is the demand of the customers and the earlier reserves of money for physical cash depleting fast enough. When you go online to check your current account balance, you are shown a dedicated amount that is present in your account.

This means that it is the very amount that you can withdraw in paper cash from that appropriate bank account or branch. According to a survey conducted by European Central Bank, the banks in Europe have only 13% cash present at hand apart from all that cash that has been put into circulation. That is the very reason why people who keep their assets in physical money are more liable to liquidity, inflation, and other associated market risks.

That is why many investors and capitalists out there would recommend that you convert your fiat currency into a dedicated asset, be it may gold, silver, or other such that can be liquidated if the need to produce paper cash becomes apparent. To tackle other modes of finances, central banks have their own reserves, but sadly they are not made available to the general public. Any holder of the reserves is not liable to market inflation, market crashes, and or liquidity concerns as is the case with paper money because these reserves are a form of the central bank’s own money, and they wouldn’t want it to deplete in value or concentration over time.

That is the very reason why central banks just can’t go bankrupt because they don’t hold any paper money and are the legal entities that are put in control of printing cash. Therefore the central bank reserves are risk-free investments, but then again, common people don’t have access to these at all. There can be massive liquidity shortages because of the fact that these banks must convert their digital reserves into cash so that they can be made available to the public.

Many banks commonly rely on emergency loans from the central bank alternatives to meet their current demands for money, and there can even be times when they can’t generate any more liquidity, which becomes a concern not only for the bank but the consumers themselves. That is why to cover this whole scenario in the best possible way and for the sake of avoiding any kind of financial crisis in the future many central banks around the world are currently working on central bank digital currencies which would be able to provide citizens with an abstract amount of options which they can use to transact their money, contribute to the accessibility and have the convenience of security and real-time execution of their transactions.

The Idea Behind the Digital Euro Project

As stated earlier, central banks are in charge of printing money. The European Central bank is primarily in charge of printing money for these substitute banks with whom you have a connection in the form of a bank account. This means that the central bank only issues cash to the bank and not directly to you, the consumer. This also means that the money that is present in your bank account is not tied or tethered with the European Central Bank, which means in real essence that if your bank collapses, then you are going to lose all your money and that the central bank would not be liable to paying you back or compensating you in any possible way.

There are some countries that have a probable system in place with safeguards to funds of the people in the case such an event comes to pass. Such as the Dutch deposit guarantee scheme in the Netherlands helps people to protect a portion of their funds should their bank fall miserably. This means that many people would simply not be concerned about losing their money in dedicated time, such as events of a financial crisis. Electronic payment systems have become mainstream over the years, and their growth continues to happen and stretch their reach; multiple vendors and people are dramatically showing immense interest in it.

Many banks in the European region have already been exercising the prospect of some digital cash may be a digital euro that could be transacted from one place to another in electronic form with the utmost security possible such as in the blockchain world. According to European Central Bank, the digital euro would be exactly the same as Euro that is changing hands and is being transacted from one place to another, but the mode of transaction and where it gets stored will be completely digital.

Along with that, the European Central Bank has already established a framework according to which the development of the digital euro is underway. It will be readily available to all the citizens and businesses across Europe, and it will not serve as a compliant replacement for the cash, but it will be a myriad addition to it. Another purpose for the digital euro is that it ensures that people will have access to their cash anywhere and everywhere across Europe.

There isn’t present a dedicated itinerary that confirms when or how the digital euro would come to transpire. The only thing that is confirmed at the moment is that the project is being developed and worked on at the moment and it will be made available to people and businesses as soon as it is ready and completely functional. Rather than talking about when the digital euro would be here, let’s take a deeper dive into multiple benefits that it would be able to present people with while remaining enclosed in a blockchain environment;

Automation of Monetary System

Peer-to-peer transactions and the issuance of smart contracts could take place on the blockchain that is being developed for the digital euro. It would be as convenient and luxurious as any other blockchain that serves a dedicated crypto-asset minus the volatility and uncontrolled nature of these assets, and more control and fundamental execution of transactions could be promised. With the issuance of smart contracts Internet of Things, devices could get linked to a distributed Ledger technology that includes but is not limited to automobiles, sensors, laptops, mobile phones, and other day to day electronic equipment.

If you take this whole thing in the context of machine economy, then the prospect of digital euro and digital Ledger technology is extremely promising. People would not only be able to connect their computer devices with the Internet of Things protocol, but they would be able to do the same thing with their digital wallets.

This thing will confirm that all of their finances and monetary assets are present in a single place rather than being scattered across multiple banks and economic channels, which only makes things more complicated and unhinged. Multiple devices functioning in close proximity with digital Ledger technology would be able to send and receive digital euros in real-time from one wallet to another without incurring heavy fees onto the user, thus adding to the convenience and transparency of this financial system.

Resistance Against Tampering and Manipulation

Suppose you have been following blockchain technology for some time now when you already know how immutable and resistant to manipulation the whole system is. There is nothing a user can do, such as hacking the system for their own good until a consensus is reached by at least 50% or more of the users that are in control of validating the transactions and keeping the network operable.

No one is able to falsify or alter the transaction data according to their own will or desire, and this resistance to such tampering or manipulation is exactly what makes blockchain technology a huge hit stepping into the future of finance. Even if two or more parties don’t trust each other, they can go in business with each other because of smart contracts and automatic execution of transactions once the very details or key takeaways of the contract are met by both parties. This makes business subtle and extremely mobilized during this age of complexity and complications.


The present integrity of security definitely feels threatened when it comes to the current storage practices of the present financial system. Because even to this date, much of the data from consumers is already stored in 3rd party servers that are not directly maintained by the bank. By maintenance, it is reflected that the proper optimization of the server environment is not done directly by the bank IT staff, but these third-party providers take care of that other than that the banks have proper control of their servers and the allocation of information plus any modification that is done to that.

But with the incorporation of digital Ledger technology, all the transactional data could be saved in multiple computing systems simultaneously in the form of blocks that are immutable and can’t be tampered with. This certainly and immediately enhances the very security of data but also the transactional element that is stored in there. This way, the whole system becomes greatly invincible and resistant to any hacking attempt or a cyber attack of any degree or nature.


Should a peer-to-peer digital Ledger technology euro system comes to transpire, there will be significant gains in terms of efficiency and streamlining of the transactional process. Payments could leave and enter the system almost instantaneously, which will definitely lower the transactional fee and make up for an excellent medium of digital payments done in real-time. There will never be a need for an intermediary of any kind, may this be crypto exchanges and or third party vendors that act as clearinghouses for the funds or even housing these for a limited time window before this can be cleared and furthered to a dedicated receiver.

Not only the transactional speeds would improve, but the fees for making the transaction would also reduce significantly because there will not be incurred a maintenance fee for the servers because nothing gets stored on the servers but the computational element of the blockchain entity that is the distributed Ledger managers remain active across the globe. Furthermore, the delays that are encountered in sending and receiving money from one place to another could be cleared down, plus there will not be a direct cut to the original payment that was sent.

This is just the tip of the iceberg, and there is still a lot of it that needs to be covered so that those banks out there could really tap into the motivation to finish this thing in time and bring multiple central bank digital currencies out there for people to choose from. The Digital Euro project is simply the beginning of a series of events that will be transpiring with the world economies in a race to develop and introduce their own CBDC tokens and not give way to the foreign financial practices to strike a chord with their nationals or people.

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Larry Wright

By Larry Wright

Larry Wright is a Pulitzer Prize-winning journalist and author. He is known for his insightful reporting and his ability to delve into complex issues with clarity and precision. His writing has been widely acclaimed for its depth and intelligence.