Q20: Would the digital euro be programmable money?

The European Central Bank answers:

Programmable money is a digital form of money used for a predefined purpose, like a voucher, with limitations on where, when or with whom it can be used.

As also envisaged in the European Commission’s proposed digital euro Regulation, the digital euro would never be programmable money, but it could facilitate conditional payments (for example, if a customer buys something online and chooses the option to pay on delivery).

We answer them:

It is strange that the ECB would use such an absolute term as “never” in the context of a technology that can easily be modified or extended based on sociopolitical demands, especially given that the ECB is allegedly still under public consultation with stakeholders. The answer also does not provide the reasons why the ECB has a different view on programmable money than other central banks such as the Monetary Authority of Singapore [1]. There are valid use cases for such technology, some of which are politically demanded and arguably socially beneficial, like privacy-preserving mechanisms for age restriction [2]. Such features should therefore probably be considered on a case-by-case basis.

It is not unlikely that private alternatives will offer digital payments with programmable money even before the issuance of the first digital euro, leaving the “global front-runner” by the ECB behind.

  1. Monetary Authority of Singapore, Purpose bound money (PBM) technical whitepaper. https://www.mas.gov.sg/-/media/mas-media-library/development/fintech/pbm/pbm-technical-whitepaper.pdf, 2023.
  2. Ö. Kesim, C. Grothoff, F. Dold, and M. Schanzenbach, Zero-knowledge age restriction for GNU taler, In Proc. Computer security–ESORICS 2022: 27th european symposium on research in computer security, copenhagen, denmark, september 26–30, 2022, proceedings, part i, 2022, pp. 110–129.