| Deutsche Bundesbank

How would the digital euro work?
The digital euro would enable secure instant payments – in physical or online shops and between individuals. It would not matter in which euro area country you are located or which PSP you use.
The first step would be to set up a digital euro wallet through a bank, a post office or other payment service provider.
Once your digital euro wallet is set up, you will be able to put money into it via a linked bank account or by depositing cash. You would then be able to make payments using the digital euro wallet, for example via your phone or a smart card.
Digital euro payments would always be safe and instant – whether in physical stores, in online shops or between people.
The digital euro would offer both online and offline functionalities. This means it could be used even if network reception is poor or nonexistent. Moreover, transaction details of offline digital euro payments would be known only to the parties to the transaction. This would provide a cash-like level of privacy.

Further Information

How would the digital euro work?

ecb.europa.eu
Who could use the digital euro?

According to the European Commission’s proposal for a regulation on the establishment of the digital euro, the digital euro would be available to households, businesses and public sector entities that are temporarily or permanently resident in a euro area country.
People who are in the euro area for private or professional purposes could also have access to the digital euro.
Access could also be available to households, businesses and public sector entities resident or established outside the euro area. This would require them to open a digital euro account with a payment service provider established or operating in a country belonging to the European Economic Area or in a third country. Before that could happen, the EU and the third country concerned would need to have fixed up a corresponding agreement and/or the European Central Bank and the national central bank of the non-euro area Member State or third country would need to have concluded corresponding arrangements with one another.
Can businesses hold digital euro?
More than two years ago, the Eurosystem initially decided to prioritise the digital euro for euro area consumers. This addresses classic retail use cases at the point of sale (POS), e-commerce and person-to-person (P2P) payments. There was therefore the assumption that businesses would not hold digital euro. This was considered against the backdrop of the fact that retailers, in particular, could rapidly accumulate large volumes of digital euro stocks in retail payments.
Further use cases for business-to-business (B2B) payments were investigated as part of an innovation platform. Various use cases were proposed by firms and implemented in a test environment.

Further information

Digital euro innovation platform Outcome report: pioneers and visionaries workstreams

ecb.europa.eu
What happens with the payment data of digital eu-ro users?

We take your concerns about protecting your privacy very seriously. On the one hand, there are concerns that the Eurosystem will access payment data, and on the other, payment data need to be protected against profit-oriented companies.
The Bundesbank and other Eurosystem central banks will jointly operate the digital euro infrastructure. The digital euro will be used only with pseudonymised data. This means that we as a central bank will not be able to see, track or link account balances or payments to individuals or their purchases.
Unlike central banks, commercial banks see account movements. This is already the case with current accounts today, and that would also be the case with the digital euro. That is also necessary in order to fight fraud, money laundering and other crime. Data is protected from access by private sector firms: with the digital euro, commercial banks will only have access to a small amount of data necessary to comply with law. The use of this data for other, commercial purposes is permitted only with the explicit consent of the customer.
The digital euro will offer offline functionality. It would thus work much like cash. The payment is made directly between the payer and the payee, without banks or other third parties being privy to the details of this payment. Offline payments using the digital euro would ensure an even higher level of privacy than online payments, and personal transaction details would only be known to the payer and the payee. To prevent money laundering or terrorist financing, however, offline payments will have a transaction limit.
How well would privacy be protected with the dig-ital euro?

Privacy protection is one of the key design features of the digital euro.
The digital euro would also enable offline payments. This would offer cash-like privacy levels both for sending money to other people and for making payments in shops. When paying offline, only two parties would know the personal transaction details: the payer and the payee.
Privacy would also be protected for online digital euro transactions, as the Eurosystem, which provides the digital euro and the necessary payment infrastructure, would not be able to link payment transactions directly to specific individuals.
The Eurosystem would hold our service providers to high standards. For privacy and data protection, we would enforce the same rules that apply to the Eurosystem. Service providers would also have to comply with our strict IT and cybersecurity regulations.
The digital euro would be governed by EU regulations designed to balance privacy and security. This approach maintains robust protections against illicit activities while safeguarding individual privacy.
How would the ECB ensure that the digital euro is inclusive and accessible?

The digital euro would be a public good, like our banknotes and coins are today – but in digital form. The ECB is designing the digital euro and the digital euro app with inclusion as a guiding principle to ensure all users are able to make payments. The digital euro app would comply with the European Accessibility Act so that everyone can quickly learn how to use it.
The digital euro’s design embraces needs of vulnerable consumers. To this end, the Eurosystem relies on market research and collaboration with civil society organisations and consumer associations. The latter highlighted the importance of a universally accessible solution, intuitive design and in-person support. Free access to basic digital euro services would also be available to people without a bank account. This would close the digital exclusion gap faced by individuals with no fixed address or beneficiaries of international protection.
The European Commission’s proposed digital euro regulation would require banks distributing the digital euro to provide basic digital euro payment services for free when requested by their customers.
The digital euro would be designed to accommodate the needs of everyone, leaving no one behind.
How would the ECB ensure that digital euro pay-ments work in the same way throughout the euro area?

Supervised payment service providers (PSPs), such as euro area banks, would be responsible for distributing the digital euro. To ensure the digital euro scheme is implemented in the same way across the entire euro area, the Eurosystem is developing a digital euro scheme rulebook in a collaborative and iterative process with market participants. The rulebook is intended to establish a single set of rules, standards and procedures to ensure consistent basic digital euro services throughout the euro area. This would provide a uniform experience for users regardless of where they are located or the PSP involved – as is the case with cash today.
Would the digital euro be an alternative currency within the Eurosystem?

No. Just as banknotes and coins are not alternative currencies but rather different forms of the same currency, the digital euro would be just another way to pay in euro. The digital euro would be the European response to people’s and firms’ growing preference to pay digitally.
What would be the link between instant payments and the digital euro?

Today, when consumers make cashless payments in shops, merchants do not receive the money immediately. This digital euro would change that, as all digital euro payments would be instant.
The single set of rules, standards and procedures being developed for the digital euro would mean that instant payment solutions could be further developed to reach all euro area countries. This would reduce Europe’s dependence on the small number of private non-European companies that currently dominate the payments sector.
n genutzt werden könnten. Dann wäre Europa weniger abhängig von einer Handvoll nichteuropäischer privater Unternehmen, die derzeit den Zahlungsverkehr dominieren.
How would the digital euro’s technical architec-ture work? Would it be based on distributed ledg-er technology such as blockchain?

The digital euro would operate on a central settlement platform, and the Eurosystem would record and verify all settlements and holdings. It is important that the digital euro in people's wallets are safe – after all, these are direct liabilities of the Eurosystem so maintaining trust, both in the euro and in the Eurosystem, is a must.
The digital euro is not based on distributed ledger technology (DLT). However, it makes use of key design principles from DLT to enhance resilience and efficiency and to improve the system’s overall performance and reliability.
The digital euro’s technical architecture would build on established standards. A multi-region setup in which each region is equipped with multiple servers, going well beyond standard redundancy models, will ensure service continuity under all circumstances.
Although the precise technological basis of the digital euro has not been finalised yet, it is already certain that, unlike a public blockchain such as Bitcoin, the digital euro would operate on Eurosystem infrastructure hosted at multiple sites. Data would thus be processed efficiently and handled securely through encryption and pseudonymisation.

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