Digital Euro Prototypes Wrapped Up: ECB Awaits Decision on Development
• The European Central Bank (ECB) has released two reports on its digital euro project, which includes market research and prototyping.
• The ECB carried out a prototyping exercise between July 2022-February 2023 to see what paying with a digital euro could be like.
• It is possible to integrate a digital euro into the existing payment landscape while still leaving scope for innovation.
European Central Bank Investigates Digital Euro
The European Central Bank (ECB), which serves as the central bank of the European Union, has initiated an investigation phase of its digital euro project. As part of this, the ECB has carried out market research and prototyping exercises to gain an understanding of the industry-specific knowledge and experience in building potential technical solutions for a digital euro.
Market Research Invites Participants
The Eurosystem, which includes the ECB and national central banks of EU countries whose currency is the euro, has invited market participants to participate in the market research. This was done in order to determine if there is a sufficiently large pool of providers that are able to develop digital euro solutions. The research also suggested that different types of architectural and technological design options are available to build a technical solution for a digital euro.
Prototyping Exercise Carried Out
Between July 2022 and February 2023, the ECB carried out a prototyping exercise on what paying with a digital euro could be like for various use cases. Different design choices were put to test to determine if it could be possible to technically implement and integrate them into the Eurosystem’s settlement scheme. The tests concluded that it is possible to smoothly integrate a digital euro into the existing payment landscape while still leaving scope for additional innovation features and technologies when distributing it.
Decision On Development Awaits
While there remains some question as to whether an offline solution can be delivered in time with existing technology, this decision will be made by fall 2023 by the Governing Council of the ECB .
The findings from these investigations indicate that it is indeed possible to build and integrate a successful technical solution for using digital euros online or offline depending on design choices made by developers involved in creating such solutions.