ECB Says Digital Euro Should Focus on Online Payments First & Onboard Other DeFi Functionality Later

Although yet to decide on a digital euro, the ECB already believes the CBDC should prioritize online payments and peer-to-peer transactions.

According to the European Central Bank (ECB), the upcoming digital euro should prioritize online and peer-to-peer payments. In a recent online publication, the Eurosystem banking entity explained that other possible uses of the digital euro should play second fiddle to efficient support for online transactions. Secondary roles of the central bank digital currency (CBDC) may include tax payments, welfare payment receipts, and transactional payments.

Titled the “Rollout Approach for the Digital Euro,” the ECB publication offers a comprehensive and insightful look into digital euro outlook. The online publication presents a chronology of the CBDC’s development, from inception to proposed rollout and use cases. In addition, the document concludes by welcoming feedback on the digital euro project amid ongoing developments.

According to the ECB’s digital euro team, the CBDC must possess multiple applications to address user needs and market gaps. The team also added that “in practical terms, a staggered approach would contribute to ensuring a smooth end-user payment experience.” Furthermore, the ECB’s digital euro unit explained that the aforementioned approach could also reduce complexities regarding implementation. The unit says actions such as trying to roll out or implement new systems all at once should become easier.

Digital Euro to Prioritize Online Payments & Prevent Banks from Charging Merchants too Much

The recent online publication stressed that e-commerce usage and making payments among friends should be the CBDC’s first use case. Meanwhile, ECB officials believe that consideration of decentralized finance (DeFi) applications with the digital euro should happen later. Furthermore, the ECB previously proposed that private usage of the digital euro be free. However, the leading bank also added that there could be new laws discouraging banks from overcharging merchants.

The ECB is one of several global jurisdictions mulling a ‘centralized’ digital currency issuance. Although the European System’s central bank does not expect an implementation anytime soon, it is already crystalizing its approach to a digital euro. For instance, amid ongoing technical evacuations, the ECB explained that the digital euro would not replace fiat currency. Instead, in an address to the European Parliament committee last month, ECB executive board member Fabio Panetta explained:

“The digital euro would not replace other electronic payment methods, or indeed cash. Rather, it would complement them. And by doing so, it would safeguard our monetary sovereignty while strengthening Europe’s strategic autonomy.”

Panetta also mentioned online payments as the perfect use case for the digital euro instead. According to him:

“Our priority for the digital euro project has always been clear: to preserve the role of central bank money in retail payments by offering an additional option for paying with public money, including where this is not possible today, for example, in e-commerce.”

EU MiCA Legislation Final Vote Postponement

The ECB’s digital euro development follows the EU’s postponement of the final vote on Markets in Crypto Assets legislation. In January, reports stated that the European Union was deferring its final MiCA legislation vote for the second time in two months. The stated reason for the decision was a technical issue in the guiding 400-page legal document.



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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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