These are the new findings

The European Central Bank has been working on a digital central bank currency (CBDC) for some time. Even if there is still a lot of ambiguity, as we have already reported, there is now a breath of fresh air from the European Commission. For example, BTC-ECHO gained access to a leaked draft law from the EU Commission, which provides more detailed information on the design of the digital euro. It is not yet possible to say whether the EU Commission will finally implement this draft.

The digital euro as a cash substitute

The digital euro of the ECB is to be used as a nationwide means of payment in the entire euro zone and offer an alternative to cash. So it will be available to everyone. There will also be a basic obligation to accept, subject to individual exceptions. In principle, the national central banks can be involved in putting them into circulation. Separate agreements between states are considered necessary for use outside of the currency area.

The ECB reserves the right to develop its own app for the digital euro, even if private company solutions are to be used here. The central bank also reserves the right to charge fees for CBDC transactions.

ECB: Without functions and with limitations

As already stated in advance by ECB representatives, the digital euro should not be programmable. This seems to be an attempt to meet the fears of the population. After all, the central bank could program a kind of expiry date into the digital euro, as well as certain spending restrictions. The digital euro should therefore differ from the Chinese ambitions for the time being.

One would also like to meet the fears of the banks by reducing the attractiveness as an alternative to bank deposits. There is a fear that bank customers will withdraw their deposits and increasingly transfer them to the fail-safe central bank alternative. In order to reduce this risk, maximum limits are under discussion. Most recently, the amount of 3,000 euros was in the room, which citizens can hold in the form of the digital euro. In addition, the EU Commission points out that banks should be involved in the account management of the digital euro.

Euros on the blockchain?

Even if one holds out the prospect of using Distributed Ledger Technology (DLT), that does not mean that one can speak of a blockchain here. A public blockchain is generally ruled out because it conflicts with a central bank’s claim to control.

Nevertheless, from a technical point of view it can be a token, but without the decentralized infrastructure we know from Bitcoin and Co.

Conclusion

We have already provided extensive information about the possible risks of a CBDC. Be it the danger of increasing centralization in money creation or increased liquidity risks for the banking sector. Accordingly, it is important that the banking sector organize itself resolutely to offer private alternatives to the digital euro of the ECB. Tokenized bank money and stablecoins should now be pushed as quickly as possible by banks and savings banks. The previous approaches are not far-reaching enough.

Even if we are not threatened by Chinese conditions, in the current development of the digital euro it is very important that business and civil society exert maximum influence on the design phase. Ultimately, digital central bank money is also a projection of social and political conditions.