The European Central Bank has formalized plans to invest a substantial €1.3 billion into the development of the digital version of the euro, signaling a significant advance in the digital currency frontier. The bank has announced its intention to encompass the private sector in its push to emulate the physical cash system digitally across its powerful economy.
Partner Selection and Contract Distribution
Various private-sector partners are expected to undertake a series of five distinct projects as part of the ECB's digital euro initiative. The lion's share of the budget, amounting to €662 million, is allocated toward the development of offline payment solutions, while €237 million is earmarked for risk and fraud management.
Jonas Gross, chairperson of the Digital Euro Association and COO of Etonec, highlights the need for diverse expertise to execute these projects effectively. He anticipates a broad array of contenders, from established CBDC technology firms to big tech companies and global financial consultancies, seeking these lucrative contracts.
Privacy and Legislation
Privacy remains a pivotal concern in developing the digital euro, with many Europeans wary of potential surveillance and loss of financial autonomy. To mitigate these fears, the ECB has assured that personal data will remain under the jurisdiction of commercial banks hosting the digital euro, not the central bank itself. Moreover, proponents articulate the potential of a digital euro to enhance the eurozone's financial sovereignty and reduce dependency on dominant American payment providers.
A legislative framework is concurrently taking shape within the European Parliament. Spearheaded by lawmaker Stefan Berger, the digital euro legislation aims to establish the regulatory bedrock for the CBDC, with implementations expected to commence in alignment with the Markets in Crypto-Assets (MiCA) regulation slated for mid-2024.
The ECB has made it clear that the ultimate decision to launch the digital euro will hinge on the completion of this legislative process. While no final decision has been communicated, the prototyping phase has been successfully concluded, setting the stage for further advancements in the eurozone's digital currency project.