Central Bank Digital Currencies (CBDCs) are an inevitability. The crypto boom has blown the lid off of tokenization. Indeed, there is now evidence that anything and everything can be given a digital parallel. Whether or not that’s a good thing or not is up in the air, and there are certainly some controversial instances of people taking tokenization to extreme levels. However, CBDCs make for some of the tamest use-cases of blockchain technology, and nations are taking great interest in them. Perhaps one of the biggest CBDC projects being undertaken now is that of the European Union and its digital euro. And as investors see Amazon (NASDAQ:AMZN) take the lead on testing this token, there’s as much criticism as there is excitement.
The EU isn’t the first government trialing a CBDC. Multiple Caribbean nations, as well as Nigeria, have completely rolled out CBDCs for all citizens. China has been trialing its digital yuan for months now and caught worldwide attention for it when it brought that test to the 2022 Winter Olympics. And this past week, both Iran and Russia started their own CBDC tests, with plans to get a final product out in the next year.
However, the conglomerate of European Nations is ahead of the curve when it comes to robust crypto regulations. It has already passed its robust set of blockchain regulations, called Markets in Crypto Assets (MiCA). And, even as these regulations clamp down slightly on an industry that thrives on its decentralized model, crypto executives are surprisingly welcome to it.
So, it only makes sense that joining the crowd of CBDC-bearing nations is the correct next step. The European Central Bank (ECB) is taking the lead on this through its digital euro trial. Though, it has come under a fair bit of scrutiny for its inclusion of Amazon in the process.
Digital Euro Trials to Start, With Significant Contribution From Amazon
The digital euro could be one of the most successful CBDC campaigns in the world if all goes well. ECB President Christine Lagarde, who contributed significantly to MiCA and is leading the CBDC venture, says it could find popularity even well beyond the bounds of the EU itself. And after two years of research and development, the bank is moving to the next step.
A digital euro trial is incoming, as the ECB signaled in recent statements. And earlier this month, it made its biggest announcement yet. Five companies would be assisting the ECB in the testing of the digital euro’s potential user interfaces. This job is highly critical to the success of the project. Naturally, if the crypto isn’t user-friendly, it will struggle to catch on. These five companies are tasked with different use case tests — online and offline payments, point-of-sale payments and e-commerce.
The decision has come with a fair bit of criticism, especially when factoring in Amazon’s already-strained relationship with the EU. Just days before the announcement, Amazon had vocalized plans to stop operating in the EU in order to avoid antitrust fines it faces there. When it offered a set of concessions to end the EU’s antitrust probe, many lawmakers and lobbyists demanded the proposal’s rejection.
Some ECB officials are speaking out this week in defense of the decision. ECB advisor Jürgen Schaaf says the decision comes deliberately, so as not to exclude outside nations from the digital euro. “Our wish to strengthen our monetary autonomy with a digital euro does not mean that Europe would shut down all its gates for retailers from abroad,” he told panelists at a meeting yesterday in London.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.