ECB Advances Preparation Phase for Digital Euro

The European Central Bank (ECB) has released a progress report on its digital euro project, detailing advancements made during the ongoing two-year preparation phase that began in October 2023.

The report outlines key aspects of the potential central bank digital currency (CBDC), including privacy measures, offline functionality, and the development of a standardized rulebook for the euro area.

Privacy remains a central focus of the project. For offline transactions, only the payer and payee would have access to personal transaction details. Online transactions would utilize advanced technologies to prevent the Eurosystem from directly linking transactions to individuals.

The ECB is also working on an offline functionality that would allow digital euro payments without an internet connection, aiming to ensure accessibility in various scenarios.

A digital euro rulebook is being developed by the Rulebook Development Group, consisting of representatives from Eurosystem central banks and the European retail payments market. This rulebook will standardize digital euro payments across the euro area.

In January 2024, the ECB launched calls for applications from providers for various digital euro components, including alias lookup, fraud management, and offline services.

The report addresses the issue of holding limits, which would be implemented to maintain financial stability. The ECB is developing a methodology for calibrating these limits.

User experience is another key consideration. The ECB envisions that users would access digital euro services either through their existing payment service provider apps or through a new, ECB-provided digital euro app designed to be inclusive and accessible to all.

Throughout this process, the ECB is providing technical input to support the ongoing legislative discussions in the European Parliament and Council of the European Union.

The preparation phase is set to conclude in October 2025, at which point the ECB's Governing Council will decide whether to move to the next stage of preparations. However, a final decision on issuing a digital euro will only be made after the completion of the EU legislative process.

The ECB emphasizes its commitment to continued engagement with stakeholders and the public throughout this preparatory phase, including regular updates and technical sessions with market participants.