Open Letter: Roadmap Towards a Digital Programmable Euro

  • Users could be a wide array of individuals, industrial companies, financial organizations, and retailers.
  • Programmability through smart contracts to allow automated processes and financial services such as interest payments, loans, escrow accounts, leasing, factoring, etc.
  • Interoperability of the digital programmable Euro to achieve benefits across multiple ecosystems.
  • Machine-to-machine payments will be required in the future (machine economy). Users could therefore also be devices with the realm of the IoT, i.e. autonomous cars, machines, sensors etc.
  • Integration of delivery and payment on the same DLT system resulting in near-real-time settlements for securities, digitized rights, assets, services, and products.
  • Cross-border money transfer denoted in Euro end-to-end within seconds across the globe with verified senders and recipients.
  • Q3/Q4 2020: Building knowledge. Financial institutions, regulators, supervisors and central banks should engage in knowledge transfer, learning and understanding the benefits of the digital programmable Euro. They should conduct an intense market analysis to specify concrete needs for the digital programmable Euro. This can only be successful if industrial corporations, retail companies and associations are also investigating the potential of the digital programmable Euro for their business models so that they can clearly express their demand. The goal of this first step is to quickly elevate decision-makers to a level of knowledge that empowers them to make decisions.
  • Q2 2021: DLT-enabling payment API. The financial services sector should develop a DLT-enabling payment API that connects legacy payment infrastructure (i.e., IBAN accounts) with DLT networks. This would be sufficient for the next few years as a solution for companies to offer products and services to the market given that demand for the digital programmable Euro is slowly but gradually increasing. Multiple organizations in Europe are already working on solutions based on DLT to integrate legacy payment systems. Ideally, this DLT-enabling payment API is developed with a high degree of standardization such that a high share of commercial banks and payment processors are included. This standard does not exist yet and has to be specified now.
  • Q4 2022: Establishment of a Euro token standard to be issued on various DLT networks. The private sector — specifically companies from the financial services, retail and industrial sector — should establish a token standard for the Euro with the goal: Issuing the digital programmable Euro in form of DLT-based tokens. This system must be set up in a way that the issuance can be undertaken by individual financial organizations on multiple DLT networks. Multiple technical DLT frameworks and multiple consortia already exist. With a Euro token standard, it would be possible to issue the digital programmable Euro on any technical framework and/or in any consortium. Whilst some companies in Europe have started working on such projects, more industry discussions are needed. This would ideally be facilitated by public institutions to guarantee neutrality. Based on a token standard, the digital programmable Euro could be launched by Q4 2022. With a token standard, this digital programmable Euro could be issued on multiple DLT networks to allow for interoperability. This type of the digital programmable Euro would be a privately-issued digital programmable Euro. Specifically, it would be commercial bank money similarly to the way banks issue money, or how Paypal and others operate, today but issued on DLT networks.
  • Q1 2024: Issuance by the European Central Bank (ECB). The ECB should issue a retail CBDC as a public-sector-issued digital programmable Euro to augment the developments in the private sector and fill potential gaps of the previously issued digital programmable Euro by private organizations. We believe it is important to maintain the current two-tier monetary system as the underlying architecture. This preserves the economic and legal advantages of the current system while enabling innovation and accessibility.

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