ECB locks in open standards before digital euro issuance

The European Central Bank (ECB) is trying to make the digital euro cheaper and easier to roll out by settling the technical rules early. It signed deals with three European standards bodies, ECPC, nexo standards, and the Berlin Group, so the digital euro can use open payment standards that already exist. 

Those agreements cover key parts of how the digital euro would work in real life. CPACE, built by ECPC, handles contactless payments through near-field communication between a device and a terminal.

ECB locks in open standards before digital euro issuance

Nexo standards link merchant systems to the back-end systems of payment service providers and acquirers, and those rules are already used for payment acceptance and cash machine transactions. 

The Berlin Group framework lets people pay with an alias like a phone number, and it also supports balance checks, reconciliation across mobile devices, and payment acceptance in cases where a digital euro payment starts inside a merchant app on a smartphone.

The ECB said using open standards that are already available to the market should cut adoption costs and help firms line up their systems early. That matters because Europe still does not have one open payment standard that works across terminals everywhere. Instead, the region still leans heavily on proprietary systems controlled by international card schemes and global digital wallets. For the ECB, that is both a cost problem and a dependency problem.

The bank wants the digital euro to work in a more uniform way across the euro area. By relying on standards that are already widely used in Europe, the ECB says payment acceptance should get simpler, the user experience should stay more consistent, and European payment schemes should find it easier to grow beyond their domestic markets.

In practice, that means a national card scheme could enter point-of-sale settings outside its home country without merchants needing technical upgrades to their POS terminals.

The ECB also said the upside from these standards work could show up before the digital euro is even issued. Once EU lawmakers pass the digital euro Regulation, market players would get more certainty that these standards will apply across the euro area because the digital euro would carry legal tender status.

The ECB said these standards were chosen together with market participants in the Rulebook Development Group and that they fit the goals of the Eurosystem payments strategy. More standards may be added later, but only if the ECB’s Governing Council signs off.

Questions over digital euro costs still hang over the project

While the ECB is building the rails for the digital euro, it is still keeping a tight lid on what the project has cost. Four days ago, Nicholas Anthony of the Cato Institute said the ECB refused to hand over spending details after weeks of talks and a public records request tied to its central bank digital currency work.

Nicholas said the bank asked him for identification to check whether he was an EU citizen under Article 2(1) of Decision ECB/2004/3.

Nicholas said he told the ECB he was not a European citizen and asked for the request to be handled under Article 2(2), which says noncitizens can use the same process to seek information.

He later got this reply from the ECB: “Having examined your request, we concluded that, regrettably, at this juncture, it is not possible for the ECB to process it.” The bank also said it had “exercised its discretion not to process” the request because he was not a European citizen.

That did not settle anything. Maya Thomas of Big Brother Watch then made the same request as a European citizen, and that request was also rejected.

After extending the deadline, the ECB still would not say how much had been spent on research and development for the digital euro. It argued that the release of the figures would expose the commercial interests of contractors and the bank, the ECB’s internal finances, confidential information, and personal data.

Nicholas pointed out that ECB officials have already put out parts of the spending picture in public announcements. 

Based on those figures, he estimated that at least €1.12 billion has already been set aside for the digital euro, with another €2.62 billion expected in the launch year. Though one separate estimate put the full bill as high as €18 billion.

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