Ulrich Bindseil, Director General of Market Infrastructures and Payments at the European Central Bank (ECB), recently participated in an online discussion hosted by the Official Monetary and Financial Institutions Forum. The conversation centered on the digital euro project’s next steps following the conclusion of its investigative phase.
During the discussion, Bindseil emphasized the ECB’s aim to enhance the daily lives of the public while maintaining the coexistence of central bank money. He noted that the digital euro project has now moved into the preparation phase, expected to last two years, where the focus will be on finalizing the “digital euro rulebook” and selecting potential providers for the necessary infrastructure to support a European central bank digital currency (CBDC).
While the project is in an advanced planning stage, a final proposal will be presented to the European Council after design and practical considerations are worked through in the coming two years. The European Council will make the ultimate decision on whether to proceed with the digital euro.
Bindseil addressed some design decisions made so far, including ensuring that the digital euro covers all primary use cases, making it widely accessible, and implementing a “waterfall” concept to address the cap on funds that can be held in a digital euro wallet.
The digital euro is designed to function offline and provide privacy features, addressing concerns raised by the digital asset industry. The ECB is focused on maximizing privacy and is committed to making one unit of digital euro equivalent to one unit of money with no conditional properties.
While concerns have emerged that CBDCs could be used to track individuals and control spending habits, Bindseil stressed the ECB’s commitment to dispel such notions. He acknowledged the importance of effective communication to ensure the public understands that the digital euro project will not compromise digital controls or individual autonomy.
In response to a question about stakeholder involvement, Bindseil acknowledged the need to improve and refine explanations about the digital euro project to both experts and the general public. The challenge is to address existing resentment against the digital euro and garner widespread support.
Addressing the potential impact on private payment providers, Bindseil emphasized the dynamic environment in which the digital euro will operate. He cited examples of close substitutes in the electronic payment industry coexisting without one crowding out the other due to interoperable coexistence.
The digital euro project’s next phase formally begins on November 1, breaking down into two stages. The first phase focuses on preparing to develop the digital euro rulebook, selecting potential providers, and providing technological and legislative process support, spanning two years and concluding in October 2025. The subsequent phase, subject to EU Governing Council approval, will commence in November 2025 and concentrate on developing and preparing the rollout of specific digital euro use cases.
The digital euro project is a critical step in the evolution of central bank digital currencies, and its design and development will shape its role in the European financial landscape.
