Ecb Eyes Onchain Settlements Next Year As Lawmakers Weigh Digital...

ECB executive board member Piero Cipollone said in a Friday statement that the institution will “make it possible to settle transactions based on [DLT] in central bank money” next year. He also said the ECB is “getting ready” to issue the digital euro and to link its system internationally for cross-border payments.

The digital euro underlying infrastructure would also be available to other institutions to settle transactions with other central bank digital currencies (CBDCs). The executive said that holding limits and a lack of interest are expected to “preserve banks’ role in “credit intermediation and monetary transmission.”

According to Cipollone, a CBDC is needed due to the EU’s fragmented retail payment ecosystem, slow cross-border payments. He also explained that without a CBDC, tokenization and DLT would lead to fragmentation and increased credit risk. A tokenized digital euro will also be available for the digital asset market, presumably to prevent this fragmentation.

Cipollone acknowledged that stablecoins offer a solution to slow, costly cross-border payments, but also introduce risks to currencies and financial systems. Furthermore, “if dollar-based stablecoins were to expand, […] they could erode the international role of the euro.”

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The offline variant of the digital euro would be stored locally, allowing device-to-device payments without requiring an online ledger check. The ECB discusses using the secure element in mobile devices to store offline digital euro and considers smart cards — reminiscent of cyberpunk credit chips.

An internal Nov. 27 EU document published earlier this month by German-language news outlet Netzpolitik appears to show that member states view sweeping data retention positively. The document discusses companies logging “who communicated with whom, when, where and how,” mentioning “location data” 11 times.

Source: CoinTelegraph