European Central Bank to Decide Whether to Issue Digital Euro in 2023 – The central bank of the eurozone has issued a second report on the inquiry phase of its proposal to create a digital version of the common European currency. The document describes the roles of the ECB and market participants in the digital euro ecosystem and proposes a range of design and distribution alternatives recently approved by the Governing Council.
A digital euro would be a liability on the balance sheet of the Eurosystem, the monetary authority of the eurozone comprising the ECB and the national central banks of the member states, just as banknotes are today. The regulator explains that the Eurosystem must have complete control over the issuance and settlement of digital euros.
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Supervised intermediaries, such as credit institutions and payment service providers, will distribute the digital euro to end users, including individuals, merchants, and businesses, as well as open digital euro wallets, process payments, and provide other relevant services. Know-your-customer and anti-money laundering checks will also fall under their obligations. The ECB further emphasizes: “Paying in digital euro should always be an option, irrespective of the entity with which end users open digital euro accounts or wallets and of their country of origin.”
In addition, the European Central Bank guarantees that the architecture of the digital euro will minimize its involvement in user data processing. “The Eurosystem would not be able to infer how much digital euro any individual end user holds nor to infer end users’ payment patterns,” the monetary authority elaborated.
In 2021, the inquiry phase of the digital euro project was initiated. In September of 2022, the ECB released its initial progress report. In January, work on a distribution scheme rules should commence. An announcement specified that the Governing Council of the central bank will review the research results in the fall of 2023 and decide whether to move to the realization phase.
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