LONDON (CNBC) —The European Central Bank announced Wednesday that it’s starting work toward creating a digital euro currency as more consumers ditch cash.
The project is expected to take two years and the idea is to design a digital version of the single currency, used in the 19 members of the euro zone. However, the actual implementation of the central bank backed currency could take another two years on top of the design and investigation stage.
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments, with encouraging results. All of this has led us to decide to move up a gear and start the digital euro project,” ECB President Christine Lagarde said in a statement.
“Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money,” she added.
Lagarde had forecast in March a timeline of at least four years for full implementation. In an interview with Bloomberg News, Lagarde said that this was a technical endeavor and that “we need to make sure we do it right.”
The digital euro would allow consumers to pay electronically, without the need for banknotes and coins. However, it would “complement” the existing monetary system rather than replacing physical cash and erasing the business of commercial lenders.