Following an intense two-year investigation phase launched by the Eurosystem in October 2021, the Governing Council of the European Central Bank (ECB) took the decision, on Wednesday 18 October, to move on to the preparation phase of the digital euro project from 1 November 2023, for an initial estimated period of two years.
In the first phase of its work, the Eurosystem is evaluating models for the design and distribution of a digital euro, should it be launched.
This preparation phase will include the drafting of a set of rules and procedures for the standardisation of digital euro payments throughout the euro area.
This second phase will also be devoted to appointing service providers to develop a platform and infrastructure to support a digital euro.
The final decision on the actual issue of a digital euro remains the prerogative of the Governing Council. The question will only be examined at the end of the second ‘preparation’ phase, and should not be considered before the end of the legislative deliberations, which begins under the ordinary legislative procedure, following the proposal presented on Wednesday 28 June by the European Commission (see EUROPE 13211/11).
The ECB reaffirms that it will take into account “any adjustments to the design of the digital euro that may become necessary” as a result of the legislative deliberations (see EUROPE 13105/18).
Investigation phase results
In its report published on 18 October, the ECB sets out its investigation phase results and the options selected for a digital euro. This report confirms the options mentioned in recent months, in particular by President Christine Lagarde and departing Executive Board member Fabio Panetta (see EUROPE 13168/23, 13242/12).
The digital euro would be a non-programmable central bank digital currency.
For the ECB, a digital euro would fill a gap and help to strengthen Europe’s strategic autonomy by offering a payment solution in public money that is instantaneous, usable throughout the euro area and supported by a European infrastructure of its own.
This European digital currency would be widely accessible and free for basic use (additional paid services could be offered by payment service providers).
What’s more, the digital euro would be available both online and offline, and could be used for transactions between individuals as well as with retailers and public authorities.
Financial stability
The Eurosystem considered that the option of digital euro asset limits would avoid any impact on financial stability or the transmission of monetary policy in the euro area. These limits would apply to individuals. Professionals and public authorities would have a zero asset limit. Professionals would not be able to accumulate digital euro assets, but would be able to make certain specific types of payment.
Finally, these digital euro assets would not be remunerated.
Confidentiality
Referring to one of the main concerns of citizens and MEPs (see EUROPE 13166/10), Christine Lagarde stressed that the digital euro would guarantee the highest level of confidentiality and that it would coexist with the euro in cash, which would always remain available, in the interests of inclusiveness.
In particular, the report envisages that the Eurosystem would not have access to users’ personal data.
Distribution
The digital euro would be distributed by intermediaries. It would be fungible and fully exchangeable with euros in their physical form.
Users would have access to the additional services offered around this European digital currency via an app, the payment service provider’s online interface or a dedicated Eurosystem app.
In addition, intermediaries and merchants would benefit from a compensation model. Intermediaries would be encouraged to distribute the digital euro. Merchants should be protected against excessive service charges.
In addition, the currency is presented as inclusive: people without access to a bank account or who have difficulties with digital tools could use the digital euro thanks to a physical card provided, for example, by a public body.
Link to the report: https://aeur.eu/f/94p (Original version in French by Émilie Vanderhulst)