ECB publishes progress update on digital euro preparation phase

ECB Digital Euro Progress Report: Key Points

1. Preparation Phase Progress:
   • The ECB’s digital euro preparation phase has been underway since November, with good progress reported by Piero Cipollone, ECB executive board member.
2. Focus Areas:
   • Privacy:
     • Online transactions will offer higher privacy standards than current digital payment solutions, using pseudonymisation, hashing, and data encryption.
     • Offline transactions will provide a “cash-like level of privacy,” with payment details only visible to the payer and payee.
   • Offline Functionality:
     • Investigation of technical tools for offline transactions is ongoing, focusing on account funding and fraud checks.
   • Possession Caps:
     • Digital euro holdings will not be remunerated and will be subject to holding limits to maintain financial stability and effective monetary policy transmission.
3. Stakeholder Engagement:
   • The ECB will continue engaging with stakeholders, including the European public, to ensure the successful development of the digital euro.
4. Technical Development:
   • Identification of providers for the digital euro’s supporting platform and the establishment of a technology rulebook are in progress.
5. Holding Limits Calibration:
   • A workstream involving central banks and national authorities is identifying factors influencing holding limits.
   • A dialogue and data collection exercise has started, with more engagements planned.
6. Legislative Framework:
   • Issuance of the digital euro will only proceed once relevant legislation is adopted, which is essential for its functionality.
7. Future Updates:
   • Detailed information on holding limits will be provided closer to the issuance time.
   • The ECB’s report emphasizes ongoing stakeholder engagement and legislative development for the digital euro.