Digital Euro Update: Offline Functionality Explained, Yes to Multiple Accounts and Still Waiting for Holding Limits
Excellent progress by the ECB!
Read the top two on Offline Transfers and Multiple Accounts. The holding limits paper discusses methodology, while the timetable is for this phase only.
We are getting offline transfers with our digital euro! I told you so!
The European Central Bank just released four papers showing good progress on the digital euro its new Central Bank Digital Currency.
These papers go a long way to enhancing our understanding of how the digital euro will work offline and how it will handle multiple accounts.
Both are important functionalities for the digital euro. I have frequently written that offline use for the digital euro is non-negotiable.
Two are great documents, while the other two are simply perfunctory. Overall great progress is being made!
👉TAKEAWAYS
OFFLINE TRANSFERS:
🔹 Offline transfers will include direct offline NFC-enabled mobile-to-mobile transfers! This is great news and the biggest news.
🔹 Offline transfers can also be made with a battery-powered smart card, just like in China. This is critical for the inclusion of the elderly. Will the cards be “Made in China?”
🔹 The cards will be charged with ATMs, Banks, and POS terminals. Who can run the POS terminal, your local convenience store or telecom, is not mentioned.
MULTIPLE ACCOUNTS:
🔹 What happens to your digital euro holding limit if you have 2 or 3 accounts as many do?
🔹 Easy: you can split the limit between accounts and specify how much of the limit each device, whether online or offline.
🔹 This is great functionality and is the first feature that actually beats China’s digital yuan, which, at least so far, does not have this feature.
🔹 There is also a “switch and port” solution, which is simpler but does not provide true multiple account functionality and has difficulty with offline wallets. I don’t think it will fly.
HOLDING LIMITS
🔹 This paper falls short as it only outlines the methodology for determining them. It does not give a hint of the range of what the numbers might be.
TIMELINE
🔹 There is no big reveal here; the architecture for the digital euro should be revealed by Q4 2024 when the digital euro rulebook and pilot rollout are ready.
Offline transfer devices and use cases
👊STRAIGHT TALK👊
The ECB scores big points for solid progress, and Europeans, whether they like the digital euro or not, should be pleased that development is being handled professionally.
I give the ECB and its teams 4.5 stars or A- for these papers. They only lost points on the holding limits papers!
This won’t make digital euro haters any happier, but it should give the rest of us some comfort that the ECB is delivering what it advertised.
The key designs for privacy haven’t yet been revealed but if they are handled so professionally we’re good to go!
Thoughts?
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