Is the digital Euro on its way?
Image source: Getty Images  The European Central Bank (ECB) is mulling over plans for the digital Euro, says stocks and shares ISA financial firm Saxo Markets. Heres how it might work. The digital Euro would complement the existing Euro but would be completely electronic, so no notes or coins. According to the ECB, a digital currency would give people greater choice when it comes to payments. It would also make cross-border transactions simpler and safer. Plot your path towards financial freedom with our Heros Journey tool! MyWalletHero is here to help you learn about taking control of your money, whether thats paying off debt, working towards a short-term money goal, or investing for your future. This tool can help you understand the next steps on your journey  simply choose a goal that best describes your current interests to get started. One of the main points of cryptocurrency is that its decentralised. In other words  no single organisation or government controls it. A digital Euro on the other hand would be controlled and overseen by a central bank  the ECB. Fundamentally, it will be the same as any other type of fiat currency, just a digital version of it. So, in theory, this should mean it is as safe as a tangible currency that has banknotes but less volatile. Another difference is the proposed technology behind the digital Euro. Cryptocurrencies (like Bitcoin) are managed via a public ledger (the blockchain) that anyone can access. The ECB has made it clear that control over the digital Euro will be limited. In its quarterly outlook, Saxo Markets highlights the potential risk if central banks dont adopt digital currencies. The potential danger is that largely unregulated cryptocurrencies become the norm for cross-country transactions. This, in turn, could destabilise central banks, having long-term consequences for all of us. Digital currencies, also called Central Bank Digital Currencies (CBDCs) arent new. Several countries are considering their own or have already launched pilot projects. These include the Swedish e-Krona, the e-Yuan from China, and the Sand Dollar from the Bahamas. In its digital Euro explainer, the ECB makes it clear why a CBDC is important. It says: European payments must be underpinned by a competitive and innovative market capable of meeting consumer demand while preserving European sovereignty.  In other words, its about choice but also making sure that the ECB gets there first and that no-one else undermines the banks authority. 4 iron-clad rules for saving money on everything Our Editor Sam Robson has been on a personal cost-cutting mission for years  and its time to share his wisdom. Check out his choicest saving tips and tricks in this free report, Sams 4 Iron-Clad Rules For Saving Money On Everything. Just enter your email below for instant access to your free copy. Click here! The ECBs statement shows that central banks are taking the rise of cryptocurrencies very seriously. But before the ECB decides or finalises anything, it wants to be confident about key issues. These include things like privacy and compliance. But, if policymakers and the powers that be go for it, a digital Euro could be launched in around four years time. Well, not yet. The Bank of England has set up a CBDC task force to look into the idea of a digital pound but nothings been decided yet. Get a free initial review lasting up to 1 hour, plus 50 off any follow-up advice. MyWalletHero has sourced you a 50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through Unbiased.co.uk*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free  use the Unbiased matching tool. Find an adviser now! *This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here. About the author Anne East Anne specialises in personal finance and insurance products, covering the ins and outs that enable consumers to make informed financial choices based on the facts.