ECB approves third digital euro design options set

The European Central Bank (ECB) released its third progress report on the digital euro today, along with the findings of focus groups commissioned to gather people’s views on the features of a potential digital wallet.

The announcement presents a third set of approaches and distribution options, endorsed by the institution’s governing council, which will contribute to the overall design of the digital euro.

According to the progress report, the digital euro would initially be accessible to euro area residents, governments, and merchants. Non-resident euro area citizens may also have access, provided they held an account with a euro area-based payment services provider (PSP).

The report outlines potential future releases that could expand access to consumers from selected third countries and cross-currency functionalities with other central bank digital currencies outside the euro area.

The governing council proposes that a digital euro could be distributed through existing banking apps or an app provided by the Eurosystem, offering an easy entry point for basic payment functionalities provided by PSPs.

Supervised intermediaries, such as banks distributing digital euro, would be required to offer a set of mandatory services to end-users and could offer additional services, including conditional payments and the ability to split person-to-person payments among multiple parties.

The digital euro’s design would be adjusted, as needed, to comply with the legal framework adopted by European co-legislators. Alongside the progress report, the ECB published the findings of a qualitative study using focus groups to evaluate views on specific features of a potential digital wallet.

The study shows that person-to-person transfers for the euro area are believed to be an essential feature for a digital wallet. Participants also valued offline payments, conditional payments, budget management tools, and payment on delivery and pay-per-use.

The focus group study, conducted in all the euro area countries from December 2022 to January 2023, included members of the general public, people with knowledge of technology, merchants and retailers, and individuals with limited access to banking or the internet.

Panetta said that the Eurosystem is wants to ensure a digital euro would be fit for purpose in a digital economy and that the findings from these reports will inform the project’s future, with a decision expected in the autumn.