The Journey Towards a Digital Euro: An Update

A Response to Evolving Payment Trends

The European Central Bank (ECB) has given an update on the digital euro, an initiative set to bridge the gap between traditional cash and the increasing preference for digital transactions. In a recent speech by ECB Executive Board Member, Piero Cipollone, the rationale behind it’s the digital euro design is to make people's lives easier, offering a cost-free digital payment method throughout the euro area. This digital currency aims to boost the continent's strategic autonomy and lessen its reliance on non-European payment providers. The following summarizes the matters outlined in the speech. 

Features of the Digital Euro

• Cash-like Properties: The digital euro will bring the familiarity and security of cash into the digital realm, ensuring that transactions can be carried out online and offline, catering to all regardless of their access to the internet.

• Privacy and Security: A paramount concern, the Eurosystem commits to respecting users’ privacy by not identifying individuals based on their transactions. Advanced data protection standards and innovative privacy-enhancing technologies will be implemented to safeguard user information.

• Universal Accessibility: The digital euro will be designed for everyone, ensuring no one is left behind. It will facilitate all types of retail payments across the euro area, supported by the provision of technical assistance and the option to use intermediaries for those without bank accounts.

Strengthening European Autonomy

Currently, a significant portion of digital transactions within the EU relies on international payment schemes. With 13 out of 20 euro area countries without a national card scheme, the push for a digital euro is also a step towards reducing this dependency and reinforcing Europe's financial independence.

A Collaborative Path Forward

The journey towards the digital euro is built on collaboration. From payment service providers operating at the front lines of distribution to constant engagement with stakeholders including the European Parliament, the European Commission, financial institutions, associations such as the DEA, and the public, the ECB emphasizes the collective effort required to bring the digital euro to life.

Project Milestones

• Investigation Phase (October 2021 – October 2023): Focused on concept definition, technical exploration, and design proposals.

• Preparation Phase (November 2023 – October 2025): Activities will include finalizing the scheme rulebook, selecting service providers, and conducting in-depth research into functionalities such as offline transactions.

• Next Phase (From November 2025): This phase could potentially see the development and rollout of the digital euro, contingent upon the completion of the EU’s legislative process.

Find the full speech slides here.