Piero Cipollone, a member of the executive board of the European Central Bank (ECB), recently addressed the European Parliament Committee on Economic and Monetary Affairs regarding 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 discussed how the ECB plans to ensure that the public can freely use this new form of payment.
One of the challenges that the ECB is currently addressing is finding infrastructure providers for the European Central Bank digital currency (CBDC). Cipollone emphasized the importance of being proactive in this search, stating that the ECB’s preparedness would be compromised if they only started looking for suppliers after the decision to launch the digital euro had been made. He also mentioned that any agreements with these providers would be adaptable to accommodate legislative and technological developments.
Cipollone then turned his attention to the development of a digital euro rulebook, which would establish a unified set of rules, standards, and procedures for the implementation of the digital currency. He explained that the aim is for the digital euro to function similarly to cash, providing users with independence from international payment processors and ensuring equal access to services throughout the euro zone. Cipollone compared the infrastructure for the digital euro to train rails, which can be utilized by various private companies while still being owned by the state.
In relation to the legal implications of the digital euro, a paper published by the independent European Money and Financial Forum raised concerns about the status of private payment providers integrated into the euro system. It also criticized the concept of legal tender as an outdated notion. The ECB is incorporating safeguards into the design of the digital euro to maintain financial stability, such as making it interest-free to avoid competition with savings institutions and imposing limits on public digital euro holdings. Additionally, businesses and financial institutions will be prohibited from holding the digital currency, although a workaround will be provided to link CBDC wallets with bank accounts.
Lastly, Cipollone addressed the issue of privacy in relation to the digital euro. He assured 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 knowledge of the transaction details. For online transactions, the ECB would only receive a minimal set of pseudonymised data necessary for tasks like settlement, and users would have greater control over their information compared to existing private payment systems. The digital euro would also prioritize state-of-the-art cybersecurity measures.
In conclusion, the ECB is actively working on the preparations for the issuance of a digital euro. The central bank is searching for infrastructure providers, establishing a digital euro rulebook, incorporating safeguards for financial stability, and addressing privacy concerns. The goal is to ensure that the digital euro can be used as a free and accessible means of payment for the public.