ECB Report on Digital Euro: Privacy Aspects, Limits, and Tenders
The European Central Bank has released a report on the digital euro
The European Central Bank (ECB) has recently published a progress report on the digital euro, presenting key information regarding the introduction of this digital currency. ECB initiated a two-year preparatory phase in October of last year, and the report now focuses on various aspects related to the digital euro.
Privacy Aspects and Practical Issues of the Digital Euro
The ECB report focused on two key areas related to the digital euro. Firstly, it discussed privacy aspects of the central bank digital currency (CBDC). Secondly, it presented practical issues such as possession limits, fee restrictions, and tenders associated with the digital euro.
Tenders for Multi-Billion Contracts Related to the Digital Euro
In January of this year, ECB announced a 1.1 billion euro tender for five components linked to the digital euro. This is a significant step in the process of introducing the digital currency.
Possession Limits and Transactions Involving the Digital Euro
Possession limits for the digital euro will be determined based on economic conditions just before the currency’s launch. Users will be able to conduct larger transactions by linking their digital euro wallets to bank accounts, which could influence the migration of deposits from banks.
Research indicates that low possession limits may result in the migration of deposits from banks, with significant consequences for the financial sector.
Fees and ECB Plans Regarding the Digital Euro
Commercial banks prefer low possession limits to avoid deposit outflows. ECB plans to set fee limits for payment service providers, including banks, and fees between payment service providers. The draft law shifts the responsibility for possession limits from the central bank to the banks themselves.
ECB will not charge fees for the use of the digital euro, meaning consumers will not have to pay for their transactions.
However, merchants will incur fees for payment processing, and their banks will levy charges for commercial services related to the digital euro. This is crucial information for businesses that will be utilizing this new form of payment.
