ECB identifies core use cases for digital euro

abdelaziz Fathi

Fabio Panetta, a member of the Executive Council of the European Central Bank (ECB), said the primary aim of a digital euro is to maintain “the accessibility and usability of central bank money.” But for a potential ECB cryptocurrency to succeed, people need to be able and willing to use it.

In a written statement, the ECB official suggested that a key feature is the ability to “pay anywhere,” including brick-and-mortar and online stores. Physical stores are the most important market segment for digital payments, he adds, accounting for more than 40 billion transactions in the euro area in 2019.

“Ideally, all merchants across the euro area – both in physical stores and online – would need to accept a digital euro. 20 years ago, the introduction of euro banknotes made it possible for us to pay with physical euros anywhere in the euro area. So it is no surprise that people expect to be able to use the digital complement to banknotes wherever they can pay digitally or online,” Panetta further explains.

Instant, easy, contactless payments, especially for person-to-person payments, were the second-most valued feature, the statement reads. As such, the focus groups, which are tasked with identifying the characteristics of a digital euro, would like to see a solution that allows instant person-to-person payments regardless of the platform used by the payers and payees.

The notice goes on to detail that payments in e-commerce and physical stores, as well as person-to-person payments, are natural candidates to be prioritised among the possible use cases of a digital euro.

The Frankfurt-based authority kicked off this month a tender process for design and business model consultancy for a potential digital euro.

Earlier in September, ECB launched a two-year investigation into a Eurozone digital currency as more consumers ditch banknotes and cash. This is expected to run until next year and is focused on the design and distribution options.

However, the actual release of the ECB-backed cryptocurrency in the bloc’s 19 members could take another two years on top of the technology design and investigation stage.

The ECB chief was also keen to emphasize that the Frankfurt institution has not yet decided to issue a central bank digital currency (CBDC). But if all goes well, the central bank could launch a digital currency by 2025 if European regulators give the project the green light.

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