ECB Considers Digital Euro Access, Distribution in Third Design Progress Report

On April 24, the European Central Bank (ECB) issued its third progress report on digital euro design. This time, the bank considered access and distribution alternatives approved by the ECB’s Governing Council. 

Access to the potential digital euro clearly prioritizes convenience. Payment service providers (PSPs) will onboard digital euro consumers in accordance with their established protocols, such as Know Your Customer verification. Residents, merchants, and governments in the eurozone would be the first to benefit, with consumers in the European Economic Area and chosen third nations following in subsequent releases. Services would be accessible via the PSP’s app or a Eurosystem-provided app.

A QR code or touchless technology could be used to conduct in-store sales. Online and offline “functionalities” would be possible, and PSPs would be allowed to provide optional and value-added services such as split or periodic payments. According to the research, cross-border functions could be implemented following the debut of the digital euro in the eurozone.

Conditional payments “that are automatically instructed when pre-defined conditions are met” would be possible, but they would not be programmable money “being used only to buy specific types of goods and/or services, or to buy them only within a certain period/geography,” which has already been ruled out.

The ECB also released a report on a Kantar Public-led focus group survey of digital wallet features. Budget management options, as well as peer-to-peer, offline, and QR code payments, were warmly accepted. However, study participants highlighted concerns about their privacy.

On April 24, ECB executive board member Fabio Panetta testified before the European Parliament’s Committee on Economic and Monetary Affairs. “We will take all necessary steps to ensure that the digital euro functions as a true public good,” he assured the committee. “People would be under no obligation to use the digital euro,” he stressed. They should, however, always have the opportunity to use it. […] As a result, requiring shops who take digital payments to accept the digital euro as legal cash would be more useful and convenient for all users.”

The Eurosystem, which includes the ECB and national banks from the Eurozone, is still doing its own research for digital euro distribution. In the second quarter of this year, the European Commission intends to propose a regulation to establish a digital euro.