Once the research phase is completed for the launch of the digital euro in the European Unionstarted in 2021, The Governing Council of the European Central Bank (ECB) has decided to move to the next phase of the project. This is the preparation phase, which has a planned duration of two years.
The decision has been made to continue advancing based on the results of the phase that has just ended, where the design options of the digital euro and possible models for its distribution were analyzed. According to the report that details them, everything indicates that the ECB has designed a digital euro that would be very accessible to citizens and companies through its distribution by supervised intermediaries. Like credit institutions.
The future digital euro would be developed as a digital form of cash to be used for digital payments across the euro area. It would be widely accessible, free for basic use, and available both with and without an Internet connection. It would offer the highest level of privacy, and allow users to immediately settle payments in central bank money. It could be used in operations between individuals, points of sale, electronic commerce and public administrations.
This new phase will begin on November 1, and its first stage, as we have mentioned, will last two years. This will finalize the development of the operating rules for the digital euro. Also the selection of suppliers that could develop the platform and infrastructure of the digital euro.
In this phase there will be testing and experimentation of the development of the digital euro, which meets both the requirements of the Eurosystem and the needs of the user in terms of experience, privacy, financial inclusion and environmental footprint.
For the duration, the ECB will maintain contact with the public and parties interested in its development. After two years, the Governing Council will decide whether to move to the next stage of preparations for the digital currency, to prepare what is necessary for a possible future issuance and introduction of the digital euro.
The Governing Council, however, will not consider the decision on whether or not to issue the digital euro until the European Union’s legislative process in this regard has finished. The ECB will take into account any adjustments to its design that may be necessary as a result of deliberations at legislative level.
Data protection of the digital euro would be a priority, and the Eurosystem would not be able to see the personal data of users who use it or link payment data with individuals. In addition, this digital currency would ensure a level of privacy similar to that of cash in offline payments.
This currency would stimulate innovation and competition in the European payments sector, and would offer a pan-European payment solution for the entire euro area, subject to European governance. It would have its own infrastructure, offering a pan-European platform where supervised European intermediaries could create eurozone-wide services for their clients.
For users to access digital euro services they would have to use an application or online interface provided by their payment service provider. Or an application for the digital euro created by the Eurosystem. Those without access to a bank account or digital devices could also pay with digital euros.
They could do this, for example, through a card offered by certain public bodies, such as post offices. In addition, users will be able to convert digital euros into cash, or vice versa, through machines prepared for this purpose.
Its basic use, as has been said, will be free for individuals. A clearing model between intermediaries and merchants would ensure that there are incentives for intermediaries to be responsible for distributing the digital euro, like other electronic payment instruments. It would also ensure that there are adequate safeguards against charging excessive service fees for merchants. The Eurosystem would bear its own costs, including those related to the management of the scheme and the liquidation process.
