The European Central Bank (ECB) Secondary report On the feasibility of launching a digital euro.
Update on progress since the first report published in September 2022. This includes information about how the digital euro works in practice, including the role of intermediaries, payment models, and distribution models.
How the digital euro works
The ECB will launch a research study on the digital euro in October 2021. It sought to explore fundamental issues regarding the design and distribution of central bank digital currencies (CBDCs) in the Eurozone.
Under the proposal, researchers recommended that the digital euro adopt a supervised intermediation approach rather than a direct model to central banks.
A supervised intermediary facilitates all retail responsibilities, including the devices and interfaces that enable digital euro trading.
“Their responsibility Including providing services for users such as opening accounts and wallets, making payments, etc. Instruments and onboarding and offboarding, including knowing your customers An anti-money laundering check. “
In terms of payments, the report says the digital euro will responsibility, “Central Bank of the Eurosystem” performs settlements, including recording and verification tasks.
While supervised intermediaries have access to customer records, researchers say the involvement of the “Eurosystem” at this level is minimal and cannot infer the details of individual balances and spending. I’m here.
“Eurosystem You can’t guess how much a digital euro is. It is not held by individual end users or inferred from end user payment patterns. “
The report does not determine whether the proposed currency should operate via traditional means or distributed ledger technology, or a combination of both.
Fundraising and distribution
To maximize the adoption of the digital euro, theA seamless fundraising and fundraising experience is essential.According to reports. Under the plan, users can select manual or automatic funding/collection options.
“Supervised intermediaries provide manual funding, Disable options for both online and offline digital euro solutions. “
Automatic Funding and Withdrawal works through a ‘waterfall’ and ‘reverse waterfall’ feature that allows users to swap in and out digital euros even if transactions exceed user-set automatic thresholds To do.
“This ensures a seamless payment experience. There was a quantitative limit on individual user holdings. “
Similarly, a key aspect of high adoption is pursuing a good distribution strategy. Researchers say that digital euro payments should be a barrier-free option for merchants and countries of origin.
To facilitate this, the report recommends establishing a common set of rules, standards and procedures across the Eurozone.Promote harmonious end-users payment experience. “
The ECB Governing Body will consider the findings in autumn 2023 and decide whether the digital euro will move into the rollout phase.
CBDC projects in Nigeria and India have plateaued due to low public interest.