The European Central Bank has released a detailed digital euro project report, sharing the progress of the European CBDC and its roadmap ahead.
Central bank digital currencies (CBDCs) are at various stages of exploration around the world, especially among central banks. The European Central Bank (ECB) has shared its progress amidst the research on a European CBDC. The digital euro project report is a summary of the results of the preparation phase of the European CBDC.
The report shares how the digital euro will have an offline feature. It said it would offer cash-like privacy to the CBDC’s users. This will ensure that only the payer and payee in transactions will have the information. Payment service providers and even the Eurosystem will not have access to this information.
Further, the Eurosystem will also use hashing, data encryption, and pseudonymisation to ensure digital transactions are private. Authorities will only have access to specific data that is important for compliance with anti-money laundering and other EU laws.
“The Eurosystem is developing an offline functionality that would enable digital euro users to pay without an internet connection after pre-funding their digital euro account via the internet or an ATM. Payments would take place directly between the offline devices,” said the report.
Moreover, the ECB’s technical exploration has focused on settlements of such offline transactions directly on users’ devices. It has also aimed to ensure the CBDC’s security, user-friendliness, and smooth operations. The report mentioned the crucial role of electronic communication service providers and equipment manufacturers.
Meanwhile, the report specified holding limits for CBDC wallets and the ability for users to link them to their personal bank accounts. Subsequent sections specified the upcoming rulebook, framework, and legislative process for the CBDC.
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