ECB Partners with Tech Providers for Digital Euro

TLDR

Table of Contents

ECB collaborates with seven tech firms to develop digital euro components.
Giesecke+Devrient will enable offline payments for the digital euro.
ECB anticipates a potential digital euro launch by 2029, pending approval.
ECB regulators caution about risks posed by stablecoins in local markets.

The European Central Bank (ECB) is taking significant steps toward the potential launch of a digital euro, announcing new framework agreements with key technology providers. These agreements are part of the preparation phase for the central bank digital currency (CBDC), which could be launched in the coming years.

The ECB has engaged with seven technology providers, with one more expected to be added, to work on various components crucial for the digital euro’s development. These components include fraud and risk management, secure payment exchanges, and software development.

Key Providers Chosen for Digital Euro Project

Among the companies selected, Feedzai, which uses artificial intelligence (AI) to detect fraud, and Giesecke+Devrient, a security technology firm, are leading the way. Giesecke+Devrient will play a major role in the engineering and development of solutions that allow users to make offline payments with the digital euro. These efforts come as part of the ECB’s ongoing work to integrate and develop the necessary infrastructure for the CBDC. The companies will assist the ECB in finalizing planning and establishing timelines for the digital euro’s development.

Notably, the ECB has emphasized that the framework agreements are still in the early stages. No payments have been made yet, and the scope of these services may be adjusted in line with evolving legislation. These agreements set the groundwork for what could be a multi-year development process, which will unfold according to decisions made by the ECB Governing Council.

Digital Euro’s Path to Launch

While the ECB has been exploring the possibility of a digital euro since 2021, the project entered a preparation phase in late 2023. This phase includes detailed planning and collaboration with technology providers to develop the necessary infrastructure. However, the ECB clarified that a final decision on launching the digital euro will only occur once the Digital Euro Regulation is adopted.

Though the final launch timeline remains uncertain, an ECB official recently suggested that the digital euro could be ready as soon as 2029. This potential timeline will depend on the successful completion of various technical, legal, and regulatory steps.

Addressing Risks from Stablecoins

Amid the progress of the digital euro initiative, the ECB and other European Union regulators have expressed concerns about the potential risks posed by stablecoins in local markets. These concerns highlight the growing challenges of managing digital currencies within the EU.

This stands in contrast to recent developments in the U.S., where lawmakers passed a stablecoin regulatory framework in July. The differences between the EU and U.S. approach to digital currencies reflect contrasting priorities and strategies in dealing with digital financial innovations.

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