ECB: Digital Euro Prep Phase Begins

Dec 1, 2023 Benn-Ibler Rechtsanwälte

Future-proofing the currency: The European Central Bank (ECB) takes the next step towards the ‘digital euro’ alongside cash.

National central banks and the ECB have been working on digital central bank money for some time. The research phase of the project started in mid-2021 and will now be followed by a two-year preparatory phase to lay the foundations. This will include finalising the regulations and selecting vendors to develop the platforms and infrastructure.

The plan is to link the digital euro to the existing currency. This would guarantee stability and allow real-time payments in central bank money. The digital euro should therefore become legal tender, but not replace banknotes and coins.

The digital euro would be provided by supervised intermediaries such as banks. This means that it would be generally accessible to individuals and businesses and could be used for all digital payments throughout the euro area. It would be available both online and offline, and could be used free of charge and would be used for payments from one private individual to another, at points of sale, in online commerce and for transactions between public authorities. All these possibilities are not offered by any other digital payment instrument. The digital euro would be a bridge to this gap.

Consumers would be credited with the digital euro in their digital wallet and could use it to pay directly and around the clock, for example via an app on their smartphone – even without an internet connection. People without a bank account or digital device could also pay in digital euros, for example with a card issued by public organisations such as post offices.

It will only be possible to decide at a later stage, once the legal framework for the digital euro has been adopted at European level, whether a digital euro will eventually be issued. Its introduction is therefore not expected for four to five years.

ECB press release (18 October 2023)