- ECB designing high privacy standards to make online and offline digital payments as close as possible to cash transactions
- ECB started work on designing methodology for calibrating digital euro holding limits
- ECB continues to provide technical input to legislative discussions with European co-legislators
The European Central Bank (ECB) published its first progress report on the digital euro preparation phase, which outlines key digital euro design aspects and next steps for the project.
Digital euro privacy
The design of the digital euro includes an offline functionality that would offer users a cash-like level of privacy for payments in physical shops and between individuals. When paying offline, personal transaction details would only be known to the payer and the payee and would not be shared with payment service providers, the Eurosystem or any providers of supporting services.
In line with current practice, payment service providers would only have access to the personal data that are required to ensure compliance with EU law, such as anti-money laundering regulations. To use data for commercial purposes, payment service providers would need users’ explicit consent.
An offline digital euro
The Eurosystem is developing an offline functionality that would enable digital euro users to pay without an internet connection after pre-funding their digital euro account via the internet or an ATM. Payments would take place directly between the offline devices – e.g. mobile phones or payment cards – belonging to the users involved in the transaction, without having to rely on third parties.
The ECB’s technical work has focused in particular on delivery considerations and how to fund and defund offline digital euro wallets, including how to perform anti-money laundering and forgery checks.
Digital euro holding limits
The design of a digital euro must ensure it can be widely used as a means of payment while still preserving financial stability and the transmission of monetary policy. For this reason, digital euro holdings of individuals would not be remunerated and would be subject to holding limits.
Moreover, users would have the option to link their digital euro wallet with a commercial bank account, allowing them to make payments through their digital euro wallet without needing to pre-load it with funds.
The ECB has started work on a calibration methodology to define the holding limits, which entails a comprehensive monetary and economic assessment.
“The digital euro preparation phase is progressing well and we support the ongoing democratic debate on the legal framework for the digital euro,” said Executive Board member and chair of the High-level Task Force on a digital euro, in a statement. “The digital euro is a common European endeavor. As such, we will continue engaging with all stakeholders, including the European public, to ensure that it is successful and benefits us all.”