ECB Publishes its Report on the Progress of the Digital Euro

The European Central Bank (ECB) has published its first progress report on the development of a central bank digital currency (CBDC).

Published on 24 June, the report details technical measures such as encryption and hashing to protect the confidentiality of individual transactions and ensure data security.

It also obliges payment service providers to seek explicit consent from consumers before using financial data for commercial purposes, in order to increase transparency and trust.

A key feature of the ECB’s digital euro initiative is its support for offline transactions, allowing direct peer-to-peer exchanges without intermediaries.

This functionality would use advanced payment devices such as smartphones and specialised smart cards that could run on battery power to synchronise transactions with the blockchain once online connectivity is restored.

This is expected to improve accessibility and usability, especially in areas with unreliable internet access.

In addition to technical considerations, the ECB is consulting widely through its Rule Development Group, involving stakeholders ranging from service providers to the general public.

This approach aims to shape the regulatory framework and technical standards for CBDC, with the first comprehensive draft of the rulebook scheduled for publication by the end of 2024.

Alexander Stefanov