The European Central Bank (ECB) will use the digital euro for wholesale transactions, as was disclosed in a recent speech. Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), delivered the comments on September 26 at the Symposium on “Payments and Securities Settlement in Europe — now and future.”
Panetta said there was often some misconception about using central bank digital currency (CBDCs) for wholesale use. He further expounded that wholesale CBDCs have “existed for decades” and that “it has given effective digital infrastructures for the settlement of transactions between banks in central bank money.”
Interbank transfers and other wholesale transactions connected to CBDCs are what he means when he talks about wholesale CBDCs. He is referring to the settlement of these transactions in central bank reserves. Then, after pointing out the differences between wholesale and retail CBDCs, he discusses how wholesale payment systems might be brought into the current day.
The use of distributed ledger technology answers the problem posed by the need to modernize. But he insists that tests are necessary to demonstrate that the technology delivers the advantages that have been claimed for it.
Cooperation with Third-Party Businesses on the Design of User Interfaces
The European Central Bank (ECB) will start collaborating with private companies to develop prototypes of user interfaces for the digital euro. Midway through September, the bank said it cooperated with five companies to design possible user interfaces for the currency.
“Testing how effectively the technology underpinning a digital euro combines with prototypes generated by companies” was the goal of the prototyping process. In subsequent stages of the project, it is not anticipated that these prototypes will be used in any way.
The prototype will be estimated to be completed by the beginning of the first quarter of 2023. It will concentrate on specific use cases, such as making payments via an online store.
A Digital Euro Inevitable?
In the last 18 months, the European Central Bank (ECB) and the European area have been working on the CBDC with increasing emphasis. It is generally acknowledged that a CBDC will be helpful, and some claim that it offers several advantages over more traditional cryptocurrencies.
It is envisaged that a digital euro bill will be introduced somewhere around the beginning of 2023. This will come to a significant amount of time after the ECB initially started contemplating an exploring phase for the CBDC. However, the introduction of the digital euro might be years away, although its introduction seems unavoidable now.