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    The European Central Bank (ECB) has published a new report on the progress of its investigation into the possible launch of a digital euro. The research will continue next year with the regulator planning to make a decision whether to proceed to the realization of the project in the fall of 2023.

    ECB to Develop Rules for Digital Euro Distribution Through Intermediaries

    The eurozone’s central bank has released a second report on the advance of the investigation phase of its project to issue a digital version of the common European currency. The document presents a set of design and distribution options, recently endorsed by its Governing Council, and defines the roles of the ECB and market participants in the digital euro ecosystem.

    Just like banknotes today, a digital euro would be a liability on the balance sheet of the Eurosystem, the monetary authority of the eurozone consisting of the ECB and the national central banks of the member states. Therefore, the Eurosystem must be in full control over the digital euro issuance and settlement, the regulator explains.

    Supervised intermediaries, such as credit institutions and payment service providers, will distribute the digital euro to end users — individuals, merchants, and businesses — open digital euro wallets, process payments and provide other related services. Conducting know-your-customer and anti-money laundering checks will be part of their responsibilities, too. The ECB also emphasizes:

    Paying in digital euro should always be an option, irrespective of the entity with which end users open digital euro accounts or wallets and of their country of origin.

    Further, the European Central Bank assures that the design of the digital euro would minimize its involvement in the processing of user data. “The Eurosystem would not be able to infer how much digital euro any individual end user holds nor to infer end users’ payment patterns,” the monetary authority elaborated.

    The investigation phase of the digital euro project was launched in 2021. The ECB issued its first progress report in September, 2022. Work on a rulebook for the distribution scheme should begin in January. The central bank’s Governing Council will review the results of the research in the fall of 2023 and decide whether to proceed to a realization phase, an announcement detailed.

    Do you think the ECB will decide to issue a digital euro next year? Share your expectations in the comments section below.

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