The European Central Bank’s digital currency (CBDC) will primarily be developed as a means for peer-to-peer payments between EU citizens, excluding the possibility of using the digital euro in business processes.
During an event organized by the European Economic and Social Committee (EESC), Evelien Witlox, CBDC program manager at the European Central Bank (ECB), said that the digital euro development will focus on payments initiated by individuals.
Witlox revealed that the ECB plans to develop the CBDC for three main areas of use:
- providing peer-to-peer payments between citizens;
- using the digital euro in business processes;
- making cross-border payments.
However, according to the ECB representative, the development will primarily focus on the P2P use of the CBDC. Thus, in the first phase of testing the digital euro, which may start next year, the European digital currency won’t be available to pay bills or salaries. The European CBDC pilot project will only allow EU citizens to make personal transfers.
Earlier, the ECB analysts carried out research showing that the citizens of the European Union are ready to use the digital euro as a payment tool.
According to Jonas Gross, Chairman of the Digital Euro Association (DEA), a step-by-step approach to test the European CBDC could “jeopardize the whole plan” because its functionality must have “clear advantages” to popularize the digital euro for P2P payments. Gross said the CBDC must offer EU citizens “something better than currently existing payment methods,” otherwise its use simply won’t be successful.
The ECB officials are still undecided about the technology behind the digital euro. Witlox reports that officials are actively discussing blockchain technology, studying its functionality and security. So, the only thing the ECB analysts are sure of is that the development and implementation of the CBDC is the only option for the traditional monetary system transformation.
