While Brazil moves forward with Drex, exploring programmability and tokenization to create new financial opportunities, the European Central Bank (ECB) is also on its digital journey with the digital euro.
The digital euro: A European response to financial digitization
The digital euro is Europe’s answer to the digital transformation of finance. Designed as a Central Bank Digital Currency (CBDC) issued by the ECB, it will complement physical euros, aiming to be a simple, accessible means of payment for all EU citizens and businesses.
Moreover, the digital euro is expected to function both online and offline.
Both Drex and the digital euro share an important common feature: neither intends to replace physical or electronic money but rather complement them. However, Drex takes a step further by enabling the creation of smart contracts and integration with digital ecosystems, something that remains unclear in the European roadmap.
Current status of the digital euro
Since 2021, the ECB has been conducting exploratory studies to determine how a digital euro would function in practice. These studies focus on defining:
✔ Design and functionalities
✔ Necessary infrastructure for secure and efficient operation
Recently, the project entered its preparatory phase, which will last until 2026. During this period, the ECB will collaborate with national central banks and other stakeholders to:
✔ Test use cases
✔ Conduct proofs of concept
✔ Define the regulatory framework for implementation
A tool for financial inclusion
One of the primary objectives of the digital euro is to enhance financial inclusion, particularly for individuals with limited access to traditional banking services.
Similar to how PIX brought millions of Brazilians into the financial system, the digital euro aims to facilitate financial integration for more Europeans, simplifying and democratizing access to digital payments.
Key features of the digital euro
✔ Offline payments – One of the most anticipated functionalities is the ability to conduct transactions without an internet connection.
✔ Privacy and security – Small transactions may be anonymous, while high-value operations will maintain tracking mechanisms to prevent fraud and money laundering.
✔ Interoperability – The digital euro is designed to be integrated into the European financial system, allowing banks, fintechs, and other players to offer services based on this new digital currency.
A gradual but strategic evolution
The digital euro is advancing at a slower pace but is tailored to Europe’s specific financial needs.
CBDCs are shaped by regional challenges and opportunities, and both Drex and the digital euro are on a path to transform the global financial system.
Will Drex and the digital euro eventually meet in the Finternet?
📌 Article originally published in Blocknews.