Featured Product

    ECB Takes Another Step to Investigate Possibility of a Digital Euro

    October 02, 2020

    ECB published a report that examines the issuance of a central bank digital currency (CBDC)—the digital euro—from the perspective of the Eurosystem. The Governing Council has not taken a decision yet on whether to introduce a digital euro. This report will serve as a starting point for a public consultation that is expected to be launched on October 12, 2020 to further explore the benefits and challenges associated with a digital euro. ECB states that experimentation will start in parallel, without prejudice to the final decision. Toward mid-2021, the Eurosystem is expected to decide whether to launch a digital euro project, which would start with an investigation phase.

    This report, which has been prepared by the Eurosystem High-Level Task Force on CBDC and approved by the Governing Council, first focuses on the reasons for issuing a digital euro, identifies possible scenarios that would require the issuance of a digital euro, and examines the potential effects and implied requirements of a digital euro. The report then explores the legal considerations and discusses the functional design possibilities with respect to a digital euro. Next, the report investigates issues related to the technical and organizational approaches to digital euro services, before finally outlining the follow-up work required before a digital euro can become a reality. As per the report, it is clear that any type of design must fulfil a number of principles and requirements identified in this report—including accessibility, robustness, safety, efficiency, and privacy—while complying with the relevant legislation.

    The report explains that the analysis conducted so far has identified principles and requirements that represent the starting point of an assessment of digital euro issuance by the Eurosystem under the given scenarios. The future issuance of a digital euro depends on the results of a comprehensive policy-oriented assessment of its challenges and potential relative to alternative options. Introducing a digital euro is a policy decision and not just a technical one clarifies the report. The extent to which supervised intermediaries and prospective users would favor a digital euro and under what conditions they would be willing to adopt it should also be evaluated. The key messages presented in the report include the following:

    • A comprehensive and balanced policy-oriented assessment of the challenges of a digital euro and its potential relative to alternative options is necessary before issuance of the digital euro can be considered. The views of institutions, citizens, and professionals will provide valuable input to this assessment, including through a public consultation.
    • Practical experimentation is necessary to test functional design options and explore their technical feasibility as well as their ability to satisfy the needs of prospective users. Experimental work should involve the private sector and prospective users to the extent necessary and should not pre-empt decisions or commit the Eurosystem to providing a digital euro.
    • To ensure that meaningful answers are obtained to the open questions raised in this report, the Eurosystem will consider whether to start a digital euro project toward mid-2021, with the possible launch of an investigation phase aimed at developing a minimum viable product.
    • In addition to conceptual analysis and practical experimentation by the Eurosystem, the involvement of European and international institutions, fora, and standard-setters would be required to ensure that the digital euro could satisfy the expectations of all prospective stakeholders.

    In the report, an ECB representative states that "Looking ahead, we need to be ready to introduce a digital euro, shall the need arise. For now we maintain the options open as to whether and when this should happen."

     

    Related Links

    Keywords: Europe, EU, Banking, CBDC, Digital Currencies, Digital Euro, Cashless Payments, PMI, Fintech, ECB

    Related Articles
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7903