In an announcement last month, the European Central Bank (ECB) revealed the five companies that have been selected to partake in a “prototyping exercise” as part of the two-year investigation phase of the digital euro project.
Amazon, Caixabank, the European Payments Initiative (EPI), Nexi and Worldline are each tasked with developing front-end prototypes to explore how the back-end technology of the ECB’s digital euro will integrate into existing retail, commercial, and bank infrastructures. The exercise is expected to be completed in the first quarter of 2023 by which time the ECB will publish its findings.
Each company will explore a specific use case of the digital euro, with Amazon developing e-commerce payment prototypes, while Caixabank investigates peer-to-peer (P2P) online payments.
EPI, on the other hand, will focus on point-of-sale payments initiated by the payer while Nexi tests those initiated by the payee, and Worldline will explore how the digital euro might work with P2P offline payment.
Commenting on the inclusion of an American firm — Amazon — in this important phase of the digital euro project, Jürgen Schaaf stressed that “our wish to strengthen our monetary autonomy with a digital euro does not mean that Europe would shut down all its gates for retailers from abroad.”
Toward Cross-Border CBDC Transactions
Whereas the ECB’s prototyping exercise will examine how the digital euro will interface with the private sector stakeholders, the work of the Bank for International Settlements (BIS) Innovation Hub is more international in its scope and has been more focused on the mechanisms for cross-border central bank digital currency (CBDC) interoperability.
BIS’ Innovation Hub recently announced a partnership with central banks in Israel, Norway and Sweden to launch ‘Project Ice-breaker’ aimed at testing the use of CBDCs for international retail and remittance payments.
The initiative will see the central banks connect their domestic proof-of-concept CBDC systems to explore the technical feasibility of interlinking different national CBDCs.
The scheme is the latest cross-border CBDC experiment to be coordinated by the BIS Innovation Hub. The Hub was also involved in ‘Project Dunbar,’ a collaboration between the Reserve Bank of Australia, Central Bank of Malaysia, Monetary Authority of Singapore, and South African Reserve Bank.
In September, BIS also revealed that it has successfully completed a CBDC pilot involving the Hong Kong Monetary Authority (HKMA), Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Central Bank of the United Arab Emirates (UAE).