The European Central Bank (ECB) has requested comments on the latest draft of the digital euro rulebook.
The Rulebook Development Group (RDG) published the last update in June. Since then, it has drafted the first chapters of the digital euro rulebook in line with the legislative proposal and the digital euro design decisions approved by the Governing Council of the ECB.
The first draft, which is the intermediate version covers the (i) functional and operational models, including the end-to-end flows describing the functioning of all use cases and services relating to a digital euro; (ii) the technical scheme requirements depicting a high-level architecture and standards which should potentially be considered in a digital euro landscape; and (iii) the adherence model setting out the rights and obligations of scheme members in accordance with the draft legislation.
“Over the past months, RDG members – representing consumers, retailers and intermediaries – have been involved in preparing the various chapters of the first draft of the rulebook, which have already been shared with RDG members for an interim review,” the ECB wrote.
“This process is an opportunity for all stakeholders involved to review the rulebook as it currently stands. Based on the feedback received as part of this process, the RDG will consider making adjustments to this first draft as required.”
The Digital Euro
The digital euro is a digital version of the euro, proposed to be created as a central bank digital currency. The project, though slow to be implemented, has taken off with the creation of the rulebook.
The ECB has assured that unlike other CBDCs which critics say are meant for surveillance and financial control, the digital euro will be created with the interest of the end user in mind, hence the request for comments on the rulebook.
“The draft rulebook will be sufficiently flexible to accommodate any future adjustments and will be updated in accordance with the outcome of the digital euro legislative process. Throughout the digital euro preparation phase, the RDG will carry out further work aimed at finalizing the rulebook,” the bank further stated.
The final rulebook will include additional sections on: (i) minimum requirements for user experience, (ii) branding and communication standards, (iii) certification, (iv) testing and approval procedures, (v) internal rules, (vi) risk management, and (vii) interoperability and implementation specifications.
The Boom of CBDCs
Over the years, CBDCs have become increasingly popular, with many central banks opting for it. Different countries are at different stages in the development of their CBDCs, with the Chinese Yuan being the most prominent even though other countries like Nigeria have already launched theirs.
China is already advanced and testing the digital Yuan for international payments, after which it may proceed to launch it for public use. Countries like the U.S however are yet to decide on whether or not to launch a CBDC.
A research on the level of acceptance of a CBDC in the U.S reveals that there is significant resistance, mainly because some citizens believe it is an instrument of control. Other than that, it is a welcome idea for financial inclusion and fighting of crime.
The success of CBDCs in countries like Nigeria is however negligible, with less than 0.5% acceptance, making the central bank to opt for the creation of a stablecoin instead.