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- 1 The central bank’s recent tests reveal that their Digital Euro has a lot of potential.
- 2 There is sufficient scope for the integration of new features and technologies.
The European Central Bank (ECB) had conducted a test between July 2022 and February 2023 based on an examination of what the CBDC digital euro payments would look like in a variety of use cases.
The test revealed merging and using the choice of digital euro designs in the existing payment landscape is possible. It has a wide scope for integrating new features and technologies. The findings also reveal that, conceptually, digital euro could work both online and offline.
ECB Conducted Market Research for CBDC Technical Solutions
ECB has also conducted market research for industry-specific knowledge and technical solutions for the digital euro. The results revealed that a large number of European providers are able to develop digital euro solutions.
The market research by ECB shows that diverse architectural and technical designs are available to craft a technical solution for a digital euro. If any legislative deliberations are made in the design of the digital euro, then ECB will apply for any necessary adjustments.
Alexendre Maymat, Head of Global Transactions and Payment Services at Societe Generale, said that the central banks still need a strong argument for a new digital currency as the consumers’ needs are fulfilled with traditional payment channels.
He also stated that placing digital currency with the aim to solve the issues of citizens who are digitally challenged is probably not the best way to reduce the cash.
James Wallis, Vice President of central bank engagements at Ripple, said that the digital wallets that end users will have for using CBDC will now come from financial services providers.
Eurosystem Not Sure to Add Multi-Currency Capability in CBDC
The Eurosystem is still not sure whether or not to add a multi-currency capability to the digital euro back-end. It is also engaging with other central banks to know which other jurisdictions are interested in the establishing of cross-currency interoperability.
The Eurosystem is proposing that in the starting release of the digital euro, the focus would be on providing access to euro-area residents, government, and merchants. The non-euro area resident will also get access but that would only be when they have an account with the euro area payment service provider (PSP).
A CBDC (digital euro) would offer an electronic means of payment that anyone could use in the euro area. It would go on to offer them security and ease. The digital euro could be used for payments through a card or a phone app.
The increasing demand for safe and trusted electronic payments has made the way for CBDC. It will provide stability for the payment. The digital euro will be safe and compliant with the law. It will enhance privacy. It will be used as a means of payment and will also be under the supervision of intermediaries.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
