Q17: Who is involved in the digital euro project?

The European Central Bank answers:

The Eurosystem – which comprises the ECB and the national central banks of the euro area – aims to ensure that the digital euro meets users’ needs. For this reason, the Eurosystem engages regularly with policymakers, legislators, market participants, civil society organisations and members of the public, who would be the ultimate users of the digital euro.

This engagement takes place in various contexts, such as the Euro Retail Payments Board, which brings together stakeholders from all parts of the European retail payments market, and the Rulebook Development Group, which comprises senior professionals from the public and private sectors with experience in finance and payments (see Q18).

The ECB also regularly engages with:

The ECB regularly participates in Eurogroup meetings with the finance ministers of euro area countries and provides regular updates on the digital euro project to the Committee on Economic and Monetary Affairs of the European Parliament.

We answer them:

The public consumer consultation [1] showed a clear preference for payment privacy and, with less importance, the wish for payments without internet connectivity. While practical proposals for a privacy-preserving CBDC design do exist [2;3;4;5], the digital euro does not offer any privacy advantages in its online version (cf. Q9). Preventing double-spending without Internet connectivity, on the other hand, which is promised for the offline version of the digital euro, contradicts mathematical evidence (KF2) as further detailed in Q7.

It is questionable to which extent the ECB was open to external suggestions during the design process, given that most key aspects of the current design— such as the separation of the online and offline version, the waterfall approach of linking commercial bank accounts to digital euro accounts, the two-tiered architecture involving private PSPs, or the usage of “secure hardware” for the offline version— were already proposed by the ECB before the start of the public consultation phase (KF6) [6].

The ECB engagement with private companies has excluded small and medium enterprises by setting high thresholds for potential participants already during the investigation phase (KF6): “Candidates must meet the following minimum requirements: a) the average annual total net turnover of the Candidate must be at least EUR 100,000,000 for the last three financial years; and b) the average annual net turnover of the similar services covered by the contract must be at least EUR 10,000,000 for the last three financial years.” [7] Requirements for tender application in the preparation phase were similar [8].

Organizing seminars to “listen” to the European civil society after making key design decisions is not an honest invite in participation, but a public relations exercise (KF6). An earlier open dialog with stakeholders and experts with the objective of identifying a feasible design for the digital euro that would have social benefits beyond establishing “absolute control” [9] over the population by the central bank would have been preferable (KF5).

  1. European Central Bank, Eurosystem report on the public consultation on a digital euro, 2021.
  2. H. Uhlig, M. Alonso, and J. Frost, Privacy in digital payments—escaping the panopticon, Georgetown Journal of International Affairs, vol. 24, no. 2, pp. 174–180, 2023.
  3. A. Aligny, E. Benoist, F. Dold, C. Grothoff, Ö. Kesim, and M. Schanzenbach, Who comes after us? The correct mindset for designing a central bank digital currency, SUERF Policy Note, no. 279, pp. 1–9, 2022.
  4. K. Wüst, K. Kostiainen, N. Delius, and S. Capkun, Platypus: A central bank digital currency with unlinkable transactions and privacy-preserving regulation, In Proc. Proceedings of the 2022 ACM SIGSAC conference on computer and communications security, 2022, pp. 2947–2960. doi:10.1145/3548606.3560617
  5. C. Grothoff and T. Moser, How to issue a privacy-preserving central bank digital currency, SUERF Policy Briefs, no. 114, 2021.
  6. C. Lagarde and F. Panetta, Report on a digital euro. European Central Bank, 2020.
  7. European Central Bank, Tender ID: PRO-007480. per Email, https://www.ecb.europa.eu/ecb/jobsproc/proc/pdf/2022-ojs040-099799-en.pdf, 2022.
  8. European Central Bank, Tender ID: PRO-009488. not public, available upon request, 2024.
  9. C. Siegner, Bank of international settlements chief talks “absolute control”. https://www.moneymetals.com/news/2021/07/12/bank-of-international-settlements-chief-talks-absolute-control-002328, 2021.