March 27, 2024
IBM's Recommendations for a Successful Digital Euro Implementation
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IBM’s Recommendations for a Successful Digital Euro Implementation

In a recent blog post, IBM gave some thoughts regarding what it would require to successfully implement the digital euro. It recommended five design elements to aid the European Central Bank’s (ECB) digital currency in “entering the highly competitive, multifaceted, and heterogeneous payments landscape in the Eurozone.”

The legislative proposal from the European Commission (EC) contains some of IBM’s comments. The first recommendation, to “build on existing rails,” is already included in the EC plan; however, the five writers suggested that it may be expanded. They reasoned that simplicity will be essential for initial uptake, and familiarity supports that.

In order for the digital euro to be accepted, intermediaries will also play a part; hence, the virtual currency should be made to meet their needs.

“We see a need for a more granular ecosystem of intermediaries. The future intermediary landscape for the digital euro should be envisioned as multi-level. Planning for more than one intermediary between the retail user and the ECB’s digital euro components would better support smaller intermediaries.”

The essay claimed that standardizing APIs would make integration easier and promote competitiveness.

To assure complete transaction privacy, IBM stated that the EC proposal’s robust offline privacy protections might be applied to online operations. The proposed legislation provides privacy protections “consistent with current digital payment’s privacy levels.” According to IBM, in order to prevent fragmented reporting, privacy laws must be aligned with a number of already-existing regulations, including reporting limits.

The authors pointed out that while distributed ledger technology is not required for the development of a digital currency, blockchain technology has the greatest advantages. They continued by saying that it does not need to operate with a higher carbon footprint than non-blockchain systems.

Finally, IBM suggests moving slowly but steadily. Begin with a minimum viable item for a quicker time to market and an environment to handle the operating environment’s extreme complexity for the future digital euro.

Image: Freepik

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