Important Revelations on the Digital Euro

In October 2021, the ECB and central banks in the Eurozone began investigating the digital euro. The ECB has released a new report detailing the progress made so far and revealing the design and distribution options approved by the ECB’s Governing Council.

Here’s what you need to know about the design of the digital euro

With the digital yuan being rolled out in China, the ECB has disclosed crucial information on the digital euro’s design. According to the ECB report, the European CBDC must meet the needs of Eurozone users and service providers.

The digital euro will be available to European residents within a few years, with traders, governments, and non-resident account holders in Europe having privileged access to it. 

Payment service providers (PSPs) in the Eurozone will distribute the digital euro, with access criteria applied in line with the Payment Services Directive (PSD2) and other relevant legislation.

End-users could access and use the digital euro via online banking applications, and the ECB might even offer its interface. The first versions of the digital euro would allow contactless payments and QR code payments.

Advanced services and features of the e-euro

Advanced features of the e-euro include basic, optional, and value-added services. These include account opening and closing, as well as in-store payments. PSPs could develop specific services such as conditional payments triggered when pre-defined conditions are met.

Moreover, the ECB plans to make the digital euro interoperable with other CBDCs. This could be achieved through contractual, technical, and operational links. The ECB calls for a global infrastructure to develop CBDCs to achieve this goal.

However, the ECB’s priority remains deploying a CBDC that meets the needs of Eurozone users. If the digital euro is successfully introduced, cross-currency functionality could be supported in cooperation with other monetary jurisdictions.

These revelations highlight Europe’s determination not to be left behind in CBDC development. Nevertheless, concerns regarding dangers such as user privacy protection remain relevant. Like in China, the digital euro could reinforce citizen surveillance. Additionally, deploying a CBDC poses a challenge to the commercial bank’s business model. In any case, it’s becoming increasingly important to keep an eye on the project’s developments.