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The European Central Bank (ECB) continues its preparatory work for a potential launch of the digital euro by October 2025. The latest progress report sheds light on key developments, including debates over holding limits, privacy features, and harmonizing regulatory frameworks.
Progress at the Midpoint
The report marks the halfway point of the preparatory phase following earlier investigative and design stages. The ECB’s Rulebook Development Group has initiated seven workstreams involving market participants and central banks to refine the digital euro rulebook. This effort seeks to harmonize national laws and establish universal standards, with updates on its progress expected in July 2025.
Debates Over Holding Limits
Research on user preferences for the digital euro continues, focusing on potential holding limits to prevent excessive accumulation. The ECB is exploring mechanisms such as a “reverse waterfall” system, which would automatically convert surplus digital euros into fiat currency in linked bank accounts.
However, holding limits remain contentious, with disagreements between the ECB and national central banks. These issues are critical as the ECB and its partners refine the technical and policy framework for the central bank digital currency (CBDC).
Enhancing Privacy
The ECB is committed to ensuring the digital euro offers cash-like privacy, addressing concerns about data security and user anonymity. The report highlights the possibility of improving privacy features for users with heightened preferences for confidentiality. ECB Executive Board Member Piero Cipollone previously assured that the digital euro would provide a higher privacy standard than existing commercial solutions.
Bolstering European Competition
The report underscores the digital euro’s role in strengthening competition within the European financial market. It envisions enabling Payment Service Providers (PSPs) to leverage digital euro infrastructure to create innovative payment solutions, helping regional and domestic payment schemes expand their reach.
Technical and Strategic Milestones
Key initiatives include selecting technical service providers, enhancing public engagement, and conducting further research on offline transaction solutions. The ECB plans to release its next progress report in the second quarter of 2025, ahead of the Governing Council’s decision on whether to proceed with a digital euro launch in October 2025.
By addressing user concerns and harmonizing operational frameworks, the ECB aims to ensure the digital euro aligns with Europe’s financial and regulatory priorities
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