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

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793