Progress continues in the creation of a digital euro, yehe European Central Bank (ECB) has documented this in a second development report outlining design and layout options recently approved by its Governing Council. The report examines four crucial issues, which are roughly in line with the timetable the ECB has set for itself, and which will, in principle, culminate in a decision to move from the research to the implementation phase in the third quarter of 2023.
The report outlined the roles of the Eurosystem and of the intermediaries and stated that the supervised intermediaries would be responsible for all management and user-facing functions of the system. The central banks that make up the Eurosystem would verify and record transactions, correct errors in that process and bear responsibility for their accuracy. However, “the digital euro would be designed in such a way as to minimize the involvement of the Eurosystem in the processing of user data,” the report stated.
Offline peer-to-peer transactions with validated digital euros could be settled on a digital storage device and subsequently “verified and recorded via secure elements on hardware devices.”
In January 2023, the @ecb will invite market participants to take part in market research to obtain an overview of options for the technical design of possible digital euro components and services #CBDC https://t.co/c2GIL5Mapg
—Central Bank Payments News (@cbpaymentsnews) December 16, 2022
In January 2023, the ECB will invite market participants to take part in a market study to obtain an overview of options for the technical design of potential digital components of the euro and the service
The ECB is not committed to Blockchain technology, the report notes:
“The Eurosystem could rely on traditional technology, distributed ledger technology or a combination of both for settlement activities. The Eurosystem has not yet made a decision on the most suitable technology for a digital euro.”
Funding and defunding (money conversion to and from digital form) must include mechanisms to manage transactions that exceed the limits established in digital currency accounts with automatic access to the bank accounts of the holders.
According to the report, For the equitable distribution of the digital euro, a set of pan-European rules, norms and procedures will be necessary, forming a ‘blueprint’. The objective of the scheme will be that:
“Paying in digital euros is always an option, regardless of the entity in which end users open digital accounts or wallets in euros and regardless of their country of origin.”
The ECB published its first report on the progress of the digital euro in September, after a year of work.
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