According to the European Central Bank’s most recent progress report on a digital retail currency, credit institutions and payment service providers will manage services related to a digital euro issued by the organization.
One of the approximately 100 governments worldwide thinking of releasing digital versions of sovereign currencies is the European Union. In October 2023, the ECB’s two-year study into a central bank digital currency (CBDC) will end, and EU leaders will decide whether to launch one.
The report released on Wednesday details the function that “supervised private intermediaries” will play in a digital euro payment system. The ECB has previously stated that they would be better at offering user-facing services and developing new business models.
Using the CBDC, intermediaries under the ECB’s supervision will serve as the direct counterparts for “individuals, merchants, and businesses.”
According to the report, their duties would also include know-your-customer and anti-money laundering checks, providing user-facing services like opening wallets or accounts, payment methods, and onboarding and offboarding. They would also offer tools or interfaces to use digital euros as payment at real-world stores, online, or in person. The issuer and redeemer of the CBDC will be handled by the ECB, which will also keep an eye on the intermediaries.
“Their responsibilities would include offering user-facing services, such as opening accounts or wallets, payment instruments, and onboarding and offboarding, encompassing know-your-customer and anti-money laundering checks. They would also provide devices or interfaces to pay with a digital euro in physical stores, online or person-to-person.”
The central bank came under fire from EU legislators earlier this year for choosing American e-commerce giant Amazon to create one of its prototypes. The ECB and the national banks of the 19 countries that utilize the single currency make up the Eurosystem, which is the monetary authority of the eurozone.
According to the report, the bank is also getting ready to finish a prototyping exercise to determine how well prospective back-end solutions created by the Eurosystem could be combined with front-end prototypes.
In September, some European Union officials asserted that the retail digital euro would initially only let individuals initiate payments and would not permit businesses to pay staff, settle debts, or be used for decentralized financing. The union has not yet determined whether it would use bitcoin-like blockchain technology.