The objective of this Proof of Concept was to evaluate the potential effects of introducing the digital euro by the Eurosystem into the existing payment infrastructure. The PoC was executed within a controlled production environment, examining various scenarios of digital euro transactions, encompassing person-to-person transfers and payments in both online and physical retail settings. Its primary purpose was to investigate the technical, operational, and business implications associated with integrating the digital euro into payment infrastructures. This included assessing its compatibility with existing digital payment methods and the feasibility of leveraging current infrastructure components.
The findings suggest that there is potential for technical compatibility between a prospective digital euro and the existing payment infrastructure. This compatibility could enable the financial industry to partially utilise existing components, contingent upon final design decisions by the Eurosystem. Such an approach could streamline the design of the digital euro, fostering economic and operational synergies by capitalising on solutions already widely adopted in the market, including value-added services such as Bizum. Additionally, it could facilitate the coexistence of the digital euro alongside existing payment solutions.
Specifically, Bizum stands ready to connect with other potential European services. Leveraging its existing mechanisms for user registration, portability between different financial institutions, authentication, transaction processing, fraud prevention, and other services or standards could ensure the same level of security, guarantees, and privacy as current payment methods in a future digital euro. This approach might also alleviate the substantial effort required for deploying an entirely new infrastructure and the necessary adaptations by market participants.
Furthermore, it could enhance the adoption and comprehension of the digital euro among consumers and businesses. The new digital currency would seamlessly integrate into a fast, convenient, and secure user experience already familiar to over half of the Spanish population. In this context, the PoC emphasised the importance of defining a similarly straightforward user experience for offline payments, which could be an important distinguishing feature of the digital euro compared to existing solutions.
Digital euro preparation
Preparation for the digital euro will depend on the Eurosystem's decision regarding the Central Bank Digital Currency (CBDC) or digital euro after the ongoing research phase initiated in 2021 concludes in October.
Following this exploratory phase, a consortium of financial entities within the sector, including Banco Santander, BBVA, CaixaBank, Unicaja Banco, Kutxabank, Grupo Caja Rural, Ibercaja, Grupo Cajamar, Abanca, Bankinter, Laboral Kutxa, Evo Banco, Banca March, Cecabank, Eurocaja Rural, Caja de Ingenieros, Banca Pueyo, Banco Mediolanum, Cajalmendralejo, Arquia Banca, Banco Caminos, Caixa Guissona, Caixa Ontinyent, Deutsche Bank, ING, N26, Openbank, Orange Bank, and Targobank, along with specialised interbank payment service infrastructures initiated this Proof of Concept (PoC) to prepare the sector for the potential issuance of a digital currency by the ECB.
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