In October 2021, the ECB and the Eurozone central banks launched the investigation phase on the digital euro. In a new report, the ECB presented the progress made. It shows the design and distribution options approved by the Governing Council of the ECB.
What you need to know about the design of the digital euro
As the rollout of the digital yuan progresses, the ECB has revealed key insights into digital euro design. In a new reportECB experts believe that the European CBDC must meet the needs of users and service providers in the euro area.
According to the report, the digital euro should be available to European residents within a few years. Merchants, governments and non-residents with an account in Europe will also have privileged access to the digital euro.
As for the distribution of the digital euro, it will be ensured by the payment service providers (PSP) of the euro area. Access criteria will be applied, in accordance with the Payment Services Directive (PSD2) and other applicable legislation.
End users could access and use the digital euro via online banking apps. In addition, the ECB may offer its own interface. The first versions of the digital euro would allow contactless payments and by QR codes.
The advanced services and functionalities of the e-euro
Basic, optional and value-added services could be offered to end users. These include, for example, the opening and closing of an account as well as payments in shops. PSPs could develop specific services such as conditional payments, which are triggered when predefined conditions are met.
Additionally, the ECB is planning interoperability between the Digital Euro and other CBDCs. This could be possible through contractual, technical and operational links. To achieve this objective, the ECB calls for a common infrastructure globally for the development of CBDCs.
However, the ECB’s priority remains the deployment of a CBDC that meets the needs of users in the euro zone. If a digital euro is successfully introduced, the provision of cross-currency functionality could be supported in cooperation with other currency jurisdictions.
These revelations highlight Europe’s determination not to be left behind when it comes to CBDCs. Nevertheless, concerns about dangers, especially in terms of Protection of private life users, remain relevant. As in China, the digital euro could strengthen citizen surveillance. In addition, the deployment of a CBDC poses a challenge to the business model of commercial banks. Either way, it is becoming more and more important to follow the developments of the project more closely.
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