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

    BCBS Amends Capital Treatment of Non-Performing Loan Securitizations

    BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.

    November 26, 2020 WebPage Regulatory News
    News

    BoE to Move Statistical Data Collection to BEEDs Portal

    BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.

    November 25, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Standards and Guidance for EFS Data Collection

    APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.

    November 24, 2020 WebPage Regulatory News
    News

    EC Consults on Criteria for Environmentally Sustainable Activities

    EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.

    November 20, 2020 WebPage Regulatory News
    News

    IFRS Examines Incorporation of Climate Risk Issues into IFRS Standards

    The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.

    November 20, 2020 WebPage Regulatory News
    News

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6162