Digital Euro Project Advances by European Central Bank

A member of the Executive Board of the European Central Bank (ECB), Piero Cipollone, told PANews that the ECB is making progress toward its objective of introducing a digital euro that would serve as a complementary payment solution across Europe, in addition to the existing currency system. At the Convgno Innovation Payments conference, Cipollone detailed the fundamental design decisions and guiding principles of the digital euro initiative in a note published on March 13. He underscored the notion that the digital euro would imbue the digital realm with cash-like capabilities, enabling offline transactions, free fundamental access, and pan-European coverage that protects privacy.

In regard to concerns regarding inclusivity, Cipollone highlighted the potential use of physical cards for digital euro payments. Furthermore, he emphasized that users would have access to in-person technical assistance and the ability to readily switch intermediaries. Users lacking bank accounts would have access to intermediaries in the form of particular public entities. Additionally, it was stated in the presentation that supervised payment service providers (PSPs) would disseminate the digital euro in order to preserve a healthy equilibrium between central bank and commercial currencies. The exclusive distribution of the digital euro by PSPs would benefit open standards and strengthen customer relationships. By drafting a digital euro regulation in collaboration with market participants, common standards would be established to facilitate a unified payment experience and assure pan-European coverage. Additionally, this would enable the development of innovative solutions.

Notably, the presentation demonstrated that retail users' digital euro holdings would be restricted, whereas businesses' would not be affected. This suggests that while banks would not be subject to such limitations, digital euro holdings by retail users would be restricted. As per the presentation, the digital euro project has successfully completed the preliminary investigation phase (October 2021 to October 2023), which entailed the formulation of design proposals, technical exploration, and concept definition. During the present preparation phase (November 2023 to October 2025), the rulebook will be finalized, service providers will be selected, knowledge will be gained through experimentation, and additional research will be conducted on offline functionality, testing, and deployment strategies. The issuance of a digital euro by the ECB is contingent upon the conclusion of the legislative procedure within the EU. The digital euro, on the other hand, might be introduced in November 2025.