Abstract
The digital euro, a topic discussed at all levels. The objective of this research paper is to tackle the matter in its entirety, both by:
- looking at the geopolitical landscape and responses to diverse policies,
- hypothesizing its technical application to infer possible results on welfare.
The first four chapters will answer the question: “What is the euro-CBDC (Central Bank Digital Currency), and what is the geopolitical situation in this regard?” The paper will, in fact, firstly analyse the European reasons for the application of this innovative technology, the deteriorating conditions among the population that led to its consideration, how the complex machinery of fiscal administration works in this regard, and how Europe plans to address these challenges.
Consequently, it will discuss how internationalization, in a fully globalized world, can function, taking into account all possible nuances and inefficiencies present in the current standard system. It will then proceed to explain how the United States has approached the introduction of a digital currency, highlighting the fundamental difference between cryptocurrencies and a centralized CBDC (a public, privacy-efficient form of currency). Then, to assess the effectiveness of a digital currency, the paper examines China’s pioneering approach, highlighting how its rapid implementation capacity has intensified strategic competition with Western economies.
In conclusion, the final chapter will attempt to answer the question—through Matlab simulations: “Should Europe create a CBDC?” The idea behind this final methodological approach is to demonstrate, factually, that the introduction of a digital currency can have a positive large-scale effect.
“A digital euro [CBDC], existing alongside cash, would future-proof our currency. It would be safe, easy to use, and free of charge.” – Christine Lagarde, Governor European Central Bank.
