The European Central Bank (ECB) has completed a digital euro prototype in preparation for deciding later this year on whether to develop a new form of EU legal tender, according to a report released on May 26. .
The ECB says central bank digital currencies (CBDCs) can be designed to foster innovation, but is skeptical about using Web3-style distributed ledger technology or smart contracts.
In a letter to European Parliament member Irene Tinagli, ECB Managing Director Fabio Panetta said: , shows that digital euro design options can be smoothly integrated into existing payment environments,” he said, adding that its findings “will serve as input to both the functional and technical design of the digital euro.” rice field.
At one point, the digital euro emerged as a response to Facebook’s own currency, Libra (later renamed Diem and then discontinued), but it became a prototype for the ECB. has been the subject of controversy, involving American tech giant Amazon.
As EU lawmakers called for a change in plans, Panetta downplayed the importance of Amazon’s long-term involvement, calling the prototype a “laboratory experiment” and “not to be scrapped and used any further.” No,’ he said.
As for the central bank’s own prototype backend, the ECB rejected distributed ledger technology, but favored a centralized model based on UTXO (Unspent Transaction Output), which is also used in cryptocurrency trading.
The UTXO system “allows for fast and efficient verification of transactions and supports a variety of payment types while preserving privacy,” the ECB report said, adding that smart contracts — a type of automated software popular in decentralized finance ) to make conditional payments, he added.
The European Commission is set to release draft legislation in June covering privacy protections for the digital euro and other key issues. But lawmakers have expressed skepticism about the benefits of CBDCs if they don’t allow innovations like programmable money that allow users to control how their money is spent afterwards.
The EU is one of many jurisdictions around the world currently considering a CBDC, including its neighbor, the Bank of England.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: ECB Finalizes Digital Euro Prototypes as Development Decision Looms