The ECB has released its inaugural update on the preparation phase for the digital euro, highlighting crucial design elements and ongoing advancements. The report underscores the importance of robust privacy standards for both online and offline transactions, with the goal of offering users a level of privacy similar to that of cash.
The progress report, titled “First Progress Report on the Digital Euro Preparation Phase,” was made public by the European Central Bank on Monday. It outlines the development of key design features, with a focus on high privacy standards for both online and offline payments. The ECB aims to “offer users a cash-like level of privacy for payments in physical shops and between individuals,” the report stated. When making offline payments, 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.
The ECB is also 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. According to the central bank, “Digital euro holdings of individuals would not be remunerated and would be subject to holding limits.” The ECB has initiated the development of a calibration methodology to define these limits, which requires a comprehensive monetary and economic assessment.
Furthermore, the ECB is providing technical input to legislative discussions and finalizing the digital euro rulebook, which is a comprehensive set of rules, standards, and procedures developed by the Eurosystem to standardize digital euro payments across the euro area.
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