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Digital euro stakeholder feedback and update on holding limit methodology The European Central Bank (ECB) published material presented at the December 10, 2024 European Retail Payments Board (ERPB) digital euro technical session. The ECB provided an overview of the market stakeholder feedback and contributions on the consultation launched at the October 1, 2024 ERPB technical session. Aso, the ECB provided an initial overview of the methodology being used for the calibration of holding limits. https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep241212_14erpb_Summary_of_feedback_on_Fit_in_the_ecosystem.en.pdf https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep241212_14erpb_Annex_to_preliminary_methodology_for_holding_limit_calibration.en.pdf

The regulation proposed by the European Parliament and Council requires both online and offline digital euro payment transactions to be available on the first issuance of the digital euro. However, the European Central Bank (ECB) says that "further testing by the Eurosystem will be necessary to guarantee that all relevant digital euro models offer sufficient security and maturity… Enshrining the ECB's intent in a legally binding provision will constrain its capacity to react to the higher level of uncertainty that the offline digital euro model involves, as well as to react to exceptional circumstances necessitating an imminent issuance of any available model. If trade-offs that have not yet been identified arise, postponing the overall issuance of the digital euro would be the only option available to the ECB… For these reasons, the ECB invites the co-legislators to consider the imposition of a requirement upon the ECB to deliver both online and offline versions of the digital euro, coupled with a 'best efforts' provision under which the ECB would make available both online and offline models as of the first issuance of the digital euro."

The European Central Bank (ECB) is inviting relevant experts to contribute to two new digital euro scheme rulebook workstreams. The first one is focused on identification and authentication the second on infrastructure-related requirements (e.g., IT security, connectivity, reconciliation, and end-to-end service level requirements, plus key performance indicators). Participation will not be remunerated, although an earlier version of the announcements said that participants will not be reimbursed for travel and subsistence expenses in connection with their attendance at workstream meetings, which have now been specified as all virtual. https://www.ecb.europa.eu/paym/intro/news/html/ecb.mipnews230508_1.en.html https://www.ecb.europa.eu/paym/intro/news/html/ecb.mipnews230508_2.en.html

The European Central Bank (ECB) published two documents discussed at the June 28, 2024 meeting of the European Retail Payments Board (ERPB) technical session of the digital euro. One was a summary of inputs on the methodology for calibrating holding limits, and the other was on the strategies for conducting euro user research and engaging with market participants (payment service providers and merchants). https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep240723_item4_feedback_holding_limit_factors.en.pdf https://www.ecb.europa.eu/euro/digital_euro/timeline/profuse/shared/pdf/ecb.deprep240723_item2_user_research_experimentation.en.pdf

The European Central Bank (ECB) published its 2nd progress report on the preparation phase of a digital euro, which was launched on November 1, 2023. Since the publication of the 1st progress report, the ECB has updated its digital euro scheme rulebook, aimed at harmonizing digital euro payments across the euro area. Also, the ECB has concluded a call for applications for selecting potential providers of digital euro components and related services, and started user research and experimentation activities, to gather insights into users' preferences and to inform design decision-making. In addition, along with with key stakeholders, the ECB will be exploring innovative use cases for the digital euro, including conditional payments. In parallel, the ECB is working with Eurosystem national central banks and other competent authorities to develop a methodology for setting digital euro holding limits.

The European Central Bank (ECB) will expand its initiative to settle transactions on distributed ledger technology (DLT) platforms in central bank money. First, it will develop and implement a safe and efficient platform for such settlements through an interoperability link with the Trans-European Automated Real-time Gross Settlement Express Transfer System (TARGET) system. Perhaps these could include the Deutsche Bundesbank "trigger solution" or the Banca d'Italia's TARGET Instant Payment System (TIPS) Hashlink solution, both of which were tested in recent ECB-run trials. Second, the ECB will look into a more integrated, long-term solution, perhaps based on the Banque de France wholesale central bank digital currency (CBDC) solution, also tested in the ECB trials. https://www.ecb.europa.eu/paym/integration/distributed/exploratory/html/index.en.html

As part of a new recurring agenda item, members were invited to report on business cases in the payments, securities, and collateral management domains where DLT could make a difference compared to non-DLT settlement systems. https://www.ecb.europa.eu/paym/groups/ntwcg/pdf/ecb.ntwdocs230907_presentations_3rd_ntwcg_meeting.en.pdf https://www.ecb.europa.eu/paym/groups/ntwcg/pdf/ecb.ntwdocs230907_business_cases_3rd_ntwcg_meeting.en.pdf

European Central Bank (ECB) Executive Board member Piero Cipollone gave a speech in which he outlined the fundamental design choices and rationale behind the digital euro project. The project is currently in the "preparation" phase in which the scheme rulebook is being finalized, service provider are being selected, deep dives are being conducted (including conducting further research on offline functions) and test and roll-out plans are being drafted. The preparation phase is expected to be complete by November 2025, at which point potential "roll-out" may happen if the legislative framework is adopted by the European Parliament. However, it's unclear what is meant by "rollout" since CBDC launches are typically preceded by pilots, a step the ECB would be unlikely to skip. https://www.ecb.europa.eu/press/key/date/2024/html/ecb.sp240313~f632c531ac.en.pdf

The European Central Bank (ECB) is inviting experts in offline payments to participate in conversations to explore options for an offline digital euro as part of its retail central bank digital currency (CBDC) work. It wants to understand the marketplace for using embedded secure elements (eSEs) and embedded SIMs (eSIMs) in user devices. Secure elements are standard-compliant chips that ensure safe data storage embedded in most smartphones and many wearables, typically for payments. eSIMs facilitate user network switches via software updates, instead of swapping physical SIM cards. Both could play roles in offline payment functionality. The experts are to be drawn from original equipment manufacturers (OEMs), mobile network operators (MNOs) and specialized trusted service managers, but none that are participating in any of the ECB public tenders on digital euro components. https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240801.en.html

The European Central Bank (ECB) has established a digital euro innovation platform to collaborate with stakeholders. The main goal is to (i) demonstrate how conditional payments could be implemented on a technical level, (ii) provide the opportunity for participants to interact with simulated digital euro interfaces, and (iii) explore additional use cases, ideas and visions that stakeholders may have for the digital euro. The ECB is encouraging all interested stakeholders to contribute, and it will carefully consider all applications before making selections in early January 2025. Selected "visionaries" will be invited to half-day workshops to present their idea to the ECB, and will be asked to provide a summarizing outcome report.

The European Central Bank (ECB) concluded the digital euro public consultation that was launched in October 2020. 8,221 citizens, firms and industry associations submitted responses to an online questionnaire, a record for ECB public consultations. An initial analysis of raw data shows that privacy of payments ranked highest among the requested features of a potential digital euro (41% of replies), followed by security (17%) and pan-European reach (10%). The ECB will publish a comprehensive analysis of the public consultation in the spring.

A European Central Bank (ECB) blog post by Ulrich Bindseil and Doris Schneeberger discusses findings from a recent ECB consumer survey and what they mean for the future of cash and digital means of payment. "Despite the preference for cashless payments, 60% of euro area consumers state that they value having the option to pay in cash. This shows that people appreciate having a choice when it comes to how they pay. Their decision may then depend on the particular situation or purchase." The post made it clear that "as cash remains widely used and valued, [the ECB is] committed to maintaining euro cash and will continue to make sure it is available.

A digital euro should prioritize online purchases and making payments among friends, according to a slide deck published on the European Central Bank (ECB) website. Other uses such as paying taxes, receiving welfare payments, and making payments in physical stores, should only follow in later tranches of a rollout. https://www.ecb.europa.eu/paym/digital_euro/investigation/governance/shared/files/ecb.degov230222_item5rolloutapproach.en.pdf

The European Central Bank (ECB) published the list of the first institutions to participate in its trials of the settlement of wholesale transactions on distributed ledger technology (DLT) based platforms using central bank money. The list is comprised of five central banks, ten institutions, six market DLT operators and five central banks. The trials will involve real transactions as well as mock simulations, with most of the tests focusing on securities settlement. There also plans to consider use cases for payment versus payment (FX) and cross border payment. Three settlement solutions are part of the trials, provided by the central banks of Germany (RTGS-based "trigger" solution), France (wholesale central bank digital currency (CBDC) solution) and Italy (TIPS Hashlink solution). https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240403.en.html

According to Politico, a battle is brewing between the European Central Bank (ECB) and several European Union national governments over the holding limits that would be applied to a potential digital euro. Under the European Parliament's draft digital euro regulation, the ECB would decide on holding limits, consistent with a vision of the digital euro as an expression of European monetary sovereignty. However, at least nine countries, including Germany, France and the Netherlands, are reportedly concerned that allowing the ECB to set the limit would leave the institution with exclusive influence over a new tool that could have outsized effects on banking stability.

The European Central Bank (ECB) gave its approval for an additional group of participants to test distributed ledger technology (DLT) for the settlement of wholesale transactions in central bank money. In total, 48 private firms from the financial sector and three central banks will take part in the second wave of the Eurosystem's exploratory work. From July to November 2024, the group will explore specific use cases, joining a first group of participants who have already been testing since May 13. This second wave will broaden the scope of the exploratory work and will cover (i) domestic payments within the euro area with mock settlement, (ii) a wide set of securities-related use cases with both real and mock settlement, and (iii) foreign exchange payment-versus-payment (PvP) transactions with other central banks with mock settlement. Meanwhile, nine participants from the first group will add further use cases and interoperability-type solutions. https://www.ecb.europa.eu/press/intro/news/html/ecb.mipnews240621.en.html

According to this European Central Bank (ECB) blog post... "There are three misconceptions about the digital euro. First, that the ECB intends to abolish cash and then, having done so, impose even lower interest rates on the digital euro for reasons related to how monetary policy is implemented. Second, that a digital euro would displace banking intermediation. And third, that the digital euro would not be based on a viable business model. First of all, it is not yet decided whether a digital euro will be introduced at all. We are still exploring the possibility and considering it conceptually. Later this year, the ECB's Governing Council will decide whether or not the ECB should launch a project to get ready to issue a digital euro. Even if it decides to do so, it would simply mean that it want to be prepared. A decision to actually issue a digital euro would come at a later stage."

A European Central Bank (ECB) report concluded that governments that don't offer central bank digital currencies (CBDCs) may face threats to their financial systems and monetary autonomy. Consumers and businesses in places that don't have their own digital currency could end up being reliant on a small number of dominant payment-service providers, including foreign tech giants. That could affect the central bank's ability to fulfill its mandate and act as a lender of last resort. https://www.ecb.europa.eu/pub/ire/html/ecb.ire202106~a058f84c61.en.html#toc18

In a legal opinion on the European Union (EU) rules, the European Central Bank (ECB) said it should have the final word on whether a stablecoin should be allowed to launch in the euro zone. "Where an asset-reference arrangement is tantamount to a payment system or scheme, the assessment of the potential threat to the conduct of monetary policy, and to the smooth operation of payment systems, should fall within the exclusive competence of the ECB." It added the proposed EU rules should be changed to say that its opinion on the matter is binding for national authorities assessing applications to issue stablecoins. https://www.ecb.europa.eu/pub/pdf/other/en_con_2021_4_f_sign~ae64135b95..pdf

The European Central Bank (ECB) reported that Euro area consumers are gradually shifting towards cards for in-person retail payments, although cash remained the most used instrument at the end of 2019. In 2019, euro area adult consumers used cash for 73% of their point-of-sale and person-to-person retail transactions (48% in value terms). In a previous ECB study conducted in 2016, the figure was 79% of these transactions (54% in value terms). The ECB carried out an ad hoc survey in July 2020 that found that 40% of respondents had used cash less often since the start of the pandemic.