European Central Bank (ECB) executive board member, Piero Cipollone, recently addressed the European Parliament Committee on Economic and Monetary Affairs to discuss the preparations for the launch of a digital euro. During his speech, Cipollone highlighted four key issues that the central bank is currently facing and outlined how the ECB plans to ensure that the public has access to a free common means of payment.
One of the main challenges mentioned by Cipollone was the search for infrastructure providers for the European Central Bank digital currency (CBDC). He stressed the importance of starting this search early on to ensure that the ECB is ready for the launch of the digital euro. The agreements made with these providers would be flexible, taking into account any legislative or technological developments that may arise.
Cipollone also discussed the development of a digital euro rulebook, which would establish a set of rules, standards, and procedures to ensure the smooth implementation of the digital currency. He emphasized that the digital euro should function similarly to cash, freeing users from relying on international payment processors and providing equal service across the euro zone. He used the analogy of train rails, stating that the digital euro infrastructure should be accessible to various private companies while still being owned by the state.
The potential participation of Amazon in the project was also mentioned by Cipollone. While the company was initially chosen to create a prototype e-commerce component for the CBDC, another call for applicants has since been issued, potentially altering Amazon’s involvement.
In terms of financial stability, Cipollone assured that safeguards would be implemented in the design of the digital euro. To avoid competition with savings institutions, the digital currency would be interest-free. There would also be limitations on public digital euro holdings, with businesses and financial institutions being prohibited from holding it. Additionally, a solution would be provided to link CBDC wallets with bank accounts, allowing transactions to be carried out without the need for pre-funding the wallets.
Privacy was another aspect addressed by Cipollone. He pledged that cash would still be retained, and offline digital euro payments would offer the same level of privacy as cash transactions, with only the payer and payee having access to the transaction details. When it comes to online transactions, the ECB would only collect a minimal amount of pseudonymized data necessary for tasks like settlement. Users would also have greater control over their information compared to existing private payment systems. The digital euro would prioritize state-of-the-art cybersecurity measures.
In conclusion, Cipollone’s speech shed light on the ECB’s preparations for the issuance of a digital euro. The central bank is actively seeking infrastructure providers, developing a rulebook, ensuring financial stability, and addressing privacy concerns. These efforts aim to guarantee that the public can access a free common means of payment that functions similarly to cash throughout the euro zone.