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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.

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