The European Central Bank (ECB) has released its inaugural update on the progress of the digital euro preparation phase, shining a spotlight on key design elements and ongoing advancements. The report underscores the implementation of robust privacy measures for both online and offline transactions, with the goal of offering users a level of privacy akin to that of cash.
In the detailed report, the ECB outlines the development of crucial design features, emphasizing the establishment of high privacy standards for both online and offline payments. The aim is to “provide users with a cash-like level of privacy for payments in physical shops and between individuals,” as explained by the ECB. When conducting offline transactions, personal transaction details would only be accessible to the payer and the payee, and would not be shared with payment service providers, the Eurosystem, or any supporting service providers.
Furthermore, the ECB is actively collaborating with national central banks and other stakeholders to establish a methodology for determining digital euro holding limits, ensuring financial stability and effective monetary policy transmission. The central bank emphasized that individual digital euro holdings would not be remunerated and would be subject to holding limits. As part of this effort, the ECB has commenced work on a calibration methodology to define these limits, involving a comprehensive assessment of monetary and economic factors.
In addition to these developments, the ECB is providing technical input to legislative discussions and finalizing the digital euro rulebook, a comprehensive framework of rules, standards, and procedures developed by the Eurosystem to standardize digital euro payments across the euro area.
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First Progress Report on Digital Euro Published by ECB