ECB Allocates Budget for Digital Euro
The European Central Bank (ECB) is making strides in the development of a digital euro by dedicating a portion of its $1.3 billion contract budget to enable offline payments for the proposed digital currency. This move indicates the ECB’s commitment to embracing the digital age and competing with private cryptocurrencies.
Major Investment in Offline Payment Capabilities
Over half of the budget, roughly $730 million, is allocated for the development of offline payment capabilities. This includes calls for applications from providers to offer a range of services, with a majority of the budget directed towards the crucial aspect of offline payments.
European Union’s Interest in Digital Euro
The 27-nation Eurozone has shown significant interest in preparing for a digital euro, with legislative proposals introduced in 2023 promising offline payments from day one. While the ECB reiterates that this work is not a commitment to issue a digital euro, the recent calls for providers indicate the pressure to deliver on legislative promises.
Focus on Offline Component
The focus on allocating a significant part of the budget to potential providers of CBDC’s offline component underscores the importance of overcoming hurdles related to offline payments in CBDC implementation. The ECB plans to introduce two digital euros for retail payments, one designed exclusively for offline use.
Challenges and Uncertainties
The ultimate decision to issue a digital euro hinges on the finalization of legislation in the European Parliament, with proposals facing political pushback. Despite the progress, approval is not guaranteed, adding an element of uncertainty to the future of the digital euro.
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