ECB questions proposal of a purely offline digital euro

THE European Central Bank is pushing back against a European Parliament proposal that would launch the planned digital euro solely offline.

In Frankfurt on Tuesday, Alessandro Giovannini, an adviser in the ECB’s directorate for the digital euro, spoke out in favour of an initiative by the European Union executive in Brussels instead of an alternative from a lawmaker.

“We do believe that the commission proposal makes sense, and the commission proposal foresees both online and offline at the same time,” he told reporters.

Giovannini was reacting to a key report by the lead EU lawmaker on the topic, which was published last month.

In it, Fernando Navarrete proposed an online version of the digital money only if the private sector doesn’t come up with its own solution to unite the region’s fractured payments landscape. Otherwise, it should be limited to an offline - or person-to-person - version.

While welcoming the publication of Navarrete’s report, the ECB official said that such an approach wouldn’t allow customers to pay when shopping online or to send each other money over distances.

“The question is, would an offline solution solve the problem that we have?” he said. “The answer, I think, is no.”

He added that the ECB doesn’t want to compete with the private sector in issuing the digital euro.

“We don’t want: ‘I act only if you fail,’” he said. “We have designed the digital euro to be something that is really for strengthening the entire payment ecosystem.”

If lawmakers pass the needed legislation by the end of next year, the ECB expects a pilot of the digital euro to launch in 2027 and the first issuance take place as early as 2029, according to slides Giovannini showed during a presentation.

“I think it’s for legislators to eventually decide what what they want,” he said, adding that the ECB will implement what parliament approves. BLOOMBERG

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