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IBM Consulting Provides Guidance for Implementing Digital Euro CBDC

As we know, the European Union has been working on its own central bank digital currency (CBDC) aka Digital Euro, and has been receiving consultations from global tech players. Tech giant IBM has recently shared a few ideas to make the Digital Euro a success.

It proposed a list of five recommendations for designers to assist the European Central Bank (ECB) in successfully integrating its digital currency into the diverse and competitive payment landscape of the Eurozone.

Some of the points mentioned by IBM already coincide with the European Commission (EC) legislative proposal. The first point involves “Build on existing rails,” as already foreseen in the ECB plan. IBM also argued that simplicity will play a crucial role in the initial adoption, emphasizing that familiarity strengthens this process.

Intermediaries will also play a role in fostering the acceptance of the digital euro. Thus the design of the Digital Euro should keep these requirements in mind. “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 ECB’s digital euro components would better support smaller intermediaries,” noted IBM.

Furthermore, the tech giant stated that the standardization of APIs would further simplify the integration process and encourage competition.

Addressing Privacy Concerns

The EC’s proposal includes robust offline privacy protections that could be expanded to cover online activities to ensure complete transaction privacy, as per IBM’s suggestion. The proposed legislation provides privacy safeguards that are in line with current levels in digital payments. IBM emphasized the importance of aligning privacy regulations with existing rules, including reporting thresholds, to prevent fragmented reporting.

While distributed ledger technology is not a necessity for creating a digital euro, the authors acknowledged that blockchain technology offers significant advantages. They emphasized that blockchain-based systems need not be more environmentally taxing than non-blockchain alternatives.

Lastly, IBM recommends a gradual and deliberate approach. They advise starting with a minimal viable product for a quicker time to market and creating a sandbox environment to address the complexities of the future digital euro’s operational landscape.

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IBM Consulting Provides Guidance for Implementing Digital Euro CBDC