Written by Ciara Davies

The European Central Bank (ECB) published a letter on 30 December 2020 (dated 22 December 2020) sent to the European Parliament on plans for a digital euro.

The ECB explains that the Eurosystem is currently conducting conceptual analysis and practical experimentation on the technical solutions that might support the issuance of a digital euro in the future.

Commercial banks would have a role in the rollout of a digital euro system and the possible impact on their provision of credit. The ECB explains that a digital euro should be made available on an equal basis in all euro area countries through supervised intermediaries. Those intermediaries would leverage their existing customer-facing services and avoid the costly duplication of processes.

A digital euro would be designed as an attractive means of payment and not a form of investment. This would avoid the associated risk of large shifts from private money (for example commercial bank deposits) to the digital euro.

The ECB is currently exploring whether transactions in digital euro would be managed in a centralised or decentralised system. The use of technologies such as blockchain will be required.

The issuance of a digital euro would be subject to the highest security standards and full compliance with relevant regulatory frameworks, including anti-money laundering and anti-terrorism financing regulations.

 A public consultation has been launched to receive feedback from all interested stakeholders. The consultation will be open until 12 January 2021 and can be accessed on the ECB’s digital euro hub.