European Central Bank seeks public input on digital euro

The European Central Bank launched a public consultation on a potential digital euro on Oct. 12.

Developments on the central bank digital currency front in the Eurozone have picked up pace amid the COVID-19 pandemic, and the central bank has framed its introduction to the public consultation with the claim that the issuance of a CBDC could help "Cushion the impact of extreme events - such as natural disasters or pandemics - when traditional payment services may no longer function."

Earlier this month, a Bloomberg report claimed that the ECB applied to trademark the term "Digital euro" on Sept. 22, and the ECB published a major new study devoted to the digital euro in early October.

As had been outlined in the report, another key benefit of a future CBDC would be providing the Eurozone with "Strategic autonomy." The introduction to the public consultation argues that a digital euro would offer an alternative to "Foreign digital means of payment, which might undermine financial stability and monetary sovereignty in the euro area."

Aside from ranking this given set of priorities in order of importance, the ECB further invites respondents to comment on this ranking and to outline any specific challenges they can foresee that would prevent them from using a digital euro.

A last choice is presented to respondents, between a digital euro that would not need a central bank or intermediary to process every single payment, and a digital euro that would require intermediaries to record transactions.

For the former option the ECB explains that "Using a digital euro would feel closer to cash payments, but in digital form - you would be able to use the digital euro even when not connected to the internet, and your privacy and personal data would be better protected."

It could make it easier to integrate a digital euro into currently available electronic banking services and applications."

The survey also has a dedicated section for finance and technology professionals' perspectives, asking them to give feedback on the role, if any, they see for banks, commercial entities, and payment institutions in providing a digital euro for end users.

Whatever the outcome of its consultations, practical experimentation, and discussions with public and private stakeholders, the ECB has said it will come to a decision on whether or not to launch a digital euro project "Towards the middle of 2021.".