The European Central Bank released its first progress report on the DigitalEuro preparation phase this week. Here are some interesting insights:
ย ๐ฃ๐ฟ๐ถ๐๐ฎ๐ฐ๐
Privacy is a top priority for both offline and online digital euro payments:
โข Offline payments will deliver a ‘cash-like’ experience, with no transaction data collected.
โข Online payments data will be recorded solely for regulatory compliance (e.g., AML checks).
This would ensure superior privacy compared to private solutions, potentially offering a competitive edge.
ย ๐ข๐ณ๐ณ๐น๐ถ๐ป๐ฒ ๐๐ฎ๐ฝ๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ถ๐ฒ๐
The ECB is exploring multiple technical solutions. Offline digital euro mobile payments require access to smartphonesโ NFC antenna and SE.
This poses a challenge because Apple restricts access to the SE on iPhones. ECB Executive Piero Cipollone expressed his concerns about this restriction in a letter to EC Commissioner Thierry Breton earlier this year.
ย ๐๐ผ๐น๐ฑ๐ถ๐ป๐ด ๐๐ถ๐บ๐ถ๐๐
The ECB is developing a methodology to calculate the maximum amount of digital euro users can hold.
This involves carefully balancing the goals of convenience and financial stability (i.e., ensuring that digital euro payments are successful without increasing the risk of bank runs).
ย ๐๐ผ๐บ๐ฝ๐ฒ๐ป๐๐ฎ๐๐ถ๐ผ๐ป
The ECB supports the compensation model proposed by the European Commissionโs draft digital euro regulation:
โข Free basic services for consumers
โข Capped merchant and inter-PSP fees for digital euro payments
โข ECB to bear issuance costs
This will be a key topic during the legislative process, as it involves balancing reduced fees with attractive remuneration for industry players.
ย ๐๐๐ ๐๐ถ๐ด๐ถ๐๐ฎ๐น ๐๐๐ฟ๐ผ ๐๐ฝ๐ฝ
Technical work on the ECB digital euro app is underway. This app will complement proprietary apps from PSPs and will feature an accessible design, including integrated voice control.
ย ๐๐ถ๐ด๐ถ๐๐ฎ๐น ๐๐๐ฟ๐ผ ๐ฅ๐๐น๐ฒ๐ฏ๐ผ๐ผ๐ธ
Progress is being made on the Digital Euro Rulebook, and a new draft version is expected by the end of the year.
ย ๐ก๐ฒ๐
๐ ๐ฆ๐๐ฒ๐ฝ๐:
โข The ECB will continue engaging with public and private stakeholders.
โข The next progress report is expected in autumn.
โข Meanwhile, the new European Parliament and the Council of the European Union will resume work on the ECโs digital euro proposal.
DigitalEuro ECB Payments DeMatteisLaw
Simone Giordano Pierluigi Cuccuru Denise Campagna