European Central Bank Shows It’s Serious About Enabling Digital Euro Offline Use

The European Central Bank (ECB) is offering a big chunk of cash to contractors who can enable offline payments for a retail digital euro.

In calls to find providers for a range of features, including risk management, information security and a user application, the ECB revealed plans to allocate as much as 1.2 billion euros ($1.3 billion) to potential contractors. More than half is earmarked for the offline payments service.

While around 100 economies worldwide are considering issuing a central bank digital currency (CBDC) as a way to sashay into the digital age and compete with private cryptocurrencies, among major jurisdictions, the 27-nation European Union is showing particular interest in preparing for one.

For the past few years, the ECB has been exploring issuing a digital version of the euro, the currency used by around 340 million people in 20 EU countries. In 2023, the bloc’s executive arm even proposed legislation for the digital currency, outlawing interest and large holdings, while promising offline payments from day 1.

Although officials at the ECB have repeatedly said the work on a digital euro is not a commitment to issue one, the calls for providers indicate promises made in the legislative proposals could be putting pressure on it to deliver.

Last week, alongside the application calls, the bank published an update on the development of a rulebook for the CBDC.

The $1.3 billion may seem like a lot of money, but what the ECB’s asking for is no mean feat, Jonas Gross, chairman of industry group the Digital Euro Association (DEA), said in an interview. For the ECB’s expectations, the budget seems reasonable, he said.

“My first reaction was, oh, man, this is really a lot of money,” said Gross. “But when you think about it’s a contract that goes for a few years, where [the ECB] really expect the partners to deliver a product that’s … really kind of perfect to be implemented on the market.”

Offline payments

More than half the budget, as much as 56%, is promised to potential providers of the offline component of the CBDC, Gross pointed out.

“This, I think, shows that this is serious, they want this, … you could also interpret it in that there are still some open questions, and there…