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- 1 To make the digital euro a success IBM has shared a blog post sharing some ideas.
- 2 It suggested five items for designers to enhance the digital currency.
IBM has some advice for the digital euro for its successful execution. The advice has some points that were already found in the European Commission (EC) legislative proposal. The first point which is already mentioned in the EC includes simplicity.
It will act as the key to early adoption. The simpler the things, the better will be the adoption rate.
Initial adoption depends on the simplicity. Unnecessary new technical specifications and expensive implementations should be avoided. Instead, for long-term success, the base of the innovations needs to be built particularly for strong privacy and uniform digital payments.
IBM Suggested Some Factors For Successful Implementation of Digital Euro
The digital currency should be designed to serve intermediaries. They are heterogeneous ranging from FinTechs to traditional incumbents. IBM said that they need a granular ecosystem for intermediaries. They should plan for more than one intermediary between the retail user and ECB’s digital euro components would better support smaller intermediaries.
The EC proposal and IBM posts suggest strong offline privacy guarantees that could be extended to online activities to verify end-to-end transaction privacy. They advised compatibility of privacy measures with recent digital payments privacy levels.
By allowing strong privacy for significantly larger volumes of cash-like payment transactions, a higher adoption rate is very likely. IBM added that privacy rules should coordinate with multiple existing regulations that include reporting thresholds to confirm that reporting is stored.
The selection of technologies is the most important to consider. It should be based on its ability to serve as a robust foundation for innovations in the coming years. The authors noted that for creation of digital euro distributed ledger technology is not a must but blockchain technology offers the most benefits. Its functionality need not be carbon intensive than non-blockchain systems.
IBM also guides users to start with minimal usable products for faster time to market. And also, a sandbox to deal with the great difficulty of the future digital euro’s operating environment.
The present cash-like features of the digital euro seem to be relevant for stronger privacy in digital retail payments and in proximity payments, same as with cash. IBM thinks that stronger privacy for person-to-business digital payments should have digital processes.
However, the conditional and cross-border payments are of significantly higher interest. The technologies to implement the digital euro have to be selected now and they should already lay the foundations for these functionalities.
Summary
IBM presented some guidelines to make the digital euro more acceptable and gain increased chances of interoperability. The points mentioned include simplicity, intermediaries support, stronger privacy, selection of technology, and beginning with a usable product. The successful adoption of the digital euro depends on these factors.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
