DEA provides industry insights on digital euro design to ECB

The Digital Euro Association (DEA) is delighted to have been invited by the European Central Bank (ECB) to the Civil Society Seminar Series “Shaping the Digital Euro”. The seminar was an internal, online, and invite-only workshop between the ECB Deputy Head of Public Communications Ronan Sheridan, Digital Euro Programme Manager Evelien Witlox, Digital Euro Advisor Jürgen Schaaf, and approximately 25 European Civil Service Associations and NGOs, such as Positive Money and Euroscience. The DEA greatly welcomes the initiative by the ECB to include civil associations in the dialogue on the digital euro. This move was robustly advocated for in the DEA Board’s support of the call for greater citizen inclusion in the digital euro project published a few months ago. Including all stakeholders in the design process of the digital euro is key to ensuring the digital euro is designed for the greater good of society.

Scope of the project and timeline

The event commenced with a presentation on the digital euro by Evelien Witlox. The presentation focused on the progress made on the digital euro project to date, the roadmap to the end of 2023, what the benefits of launching a digital euro are, and what the ECB’s current stance on the digital euro is. The presentation further outlined what the ECB felt the primary motivations for potentially issuing a digital euro were. The first motivation highlighted was that a digital euro would function as a monetary anchor in the digital space and would ensure access to central bank money for citizens, especially when cash payments are not available as a payment alternative. The second motivation outlined that a digital euro would defend strategic autonomy and support independence from non-european payment solutions. The digital euro project schedule was also presented and it was explained that the investigation phase is still ongoing, studying digital euro offline and online availability, data privacy levels, and transfer mechanisms topics. It was indicated that as a next step, design and distribution models will be analyzed in Q3 with the investigation phase expected to end in September 2023, when the Governing Council will decide if a digital euro will be launched.

Figure 1: The timeline of the digital euro project

Use cases for the digital euro were thereafter discussed. It was mentioned that person-to-person payments, consumer-to-business payments, and payments to and from the government are in the scope of the digital euro project. Business-initiated payments and machine-initiated payments will not be considered within the digital euro project.

Following a vote initiated by the organizers on the focus of the rest of the meeting, meeting participants requested more information about digital euro privacy aspects and product features/designs to which Jürgen Schaaf gave a short summary, outlining where the ECB currently stands on these matters.

Figure 2: Digital euro privacy options

Privacy options

Jürgen Schaaf stressed the importance of privacy (ranked first in the consultation on the digital euro by European citizens) and discussed different privacy options the ECB has analyzed. These options range from full anonymity to fully transparent payments to the central bank. It was argued that full anonymity will, as a preliminary view, not be a viable option as it conflicts with regulation around anti-money laundering. Nevertheless, and as stressed by some participants, since there is no CBDC regulation in place, an anonymous CBDC would not necessarily be against compliance. During the meeting, a survey about privacy was conducted amongst attendees and revealed that 50% of  participants were in favor of selective privacy, which means higher privacy for low-value transactions, an approach that has already been seen as technically feasible. 33% of the participants voted for anonymity, and 0% (!!) voted for payment transparency to an intermediary or fully transparent to the central bank. This strongly signals that Civil Service Associations expect high privacy guarantees for the digital euro.

Key takeaways:

1. It is encouraging that the ECB has entered into dialogue with Civil Service Associations such as the DEA. We hope that there will be further events in which the design of a digital euro is discussed.
   
   
2. We welcome that the ECB specifically asked the attendee Civil Service Associations what they felt the most interesting topics and aspects were to measure the sentiment around various topics of the digital euro. Questions ranged from the most important design requirement of a digital euro to the preferred level of privacy. All questions by the attendees were answered.
   
   
3. The ECB stressed that the digital euro will be based on European payment infrastructure providers. Responding to a question by DEA Chairman Jonas Gross, it was stated that the ECB will select European providers to establish the digital euro infrastructure, should the Governing Council decide to proceed with launching a digital euro.
   
   
4. It has not yet been decided if there will be holding limits for individuals using the digital euro.
   
   
5. Civil Service Associations demand very high privacy guarantees for the digital euro.

About the authors:

Jonas Gross is the Chairman of the Digital Euro Association. You can contact him via email at jonasgross@digital-euro-association.de, on LinkedIn and Twitter.

Conrad Kraft is the Executive Director of the Digital Euro Association. You can contact him via email at conrad.kraft@digital-euro-association.de and on LinkedIn. 

About the Digital Euro Association

The Digital Euro Association (DEA) is a think tank specializing in central bank digital currencies (CBDCs), stablecoins, crypto assets, and other forms of digital money based in Frankfurt, Germany. In particular, it focuses on the private and public digital euro. Its mission is to contribute to the public and political discourse through research, education, and by providing a platform and community for policy-makers, technologists, and economists to discuss digital money-related topics. The DEA is committed to independence and excellence, aiming to set the agenda and to shape policy by encouraging new ideas and forward-thinking in the field of digital money. 

For more information visit our website.