A strong digital ID is an essential part of the new evolving financial ecosystem, and Europe seems to be becoming the testing grounds for cross country use cases. (Asian countries like China have built domestic infrastructure around it)
A consortium of 6 countries in Europe is running a pilot to test use cases for digital identities with payments and digital euro being part of the vision. This is being led by nobis consortium (Nordic, Baltic countries + Germany, Italy)
Central bank digital currencies are being pitched as the alternative to counter crypto economy (a big reason if not the only), and a digital identity will be an essential differentiator, while finding ways to respect the privacy of the user.
Many European countries are attempting to use private chains to test their CBDC, Norway is a good example.
Ethereum was designed and envisioned as a platform (in the whitepaper). The web3 ecosystem is being built on and around it. Decentralized applications, new protocols and even Metaverse (most of them) are being built with Ethereum as the fundamental building block, so it is becoming absolutely critical for web3.
The blockchain has been criticised for its performance though (rather the lack of it), something that may improve with the PoW to PoS merge.
Other layer 1 cryptocurrencies, with their own blockchains have also come up with better performance (scalability, transaction speed etc.) but Ethereum still remains the gold standard (as a blockchain platform, Bitcoin still is the “Gold” standard for crypto currencies though).
A central bank leveraging Ethereum to test a digital currency is ironic. Though Ethereum is starting to seem like a central entity, nevertheless a central bank using it is a big deal.
Imagine a standardized CBDCs framework across the globe on Ethereum ! Highly unlikely but rather interesting.
It will be interesting to see the outcomes of the pilot, it could potentially set benchmarks for the entire western world with regards to digital identity.