The European Central Bank (ECB) will use a wholesale version of the digital euro CBDC for securities settlement. It also recently announced that it was working with external companies to prototype user interfaces.



As revealed in a recent speech, the European Central Bank (ECB) will be using the digital euro for wholesale purposes. Member of the ECB Executive Board Fabio Panetta made the remarks at the Symposium on “Payments and Securities Settlement in Europe — today and tomorrow” on Sept. 26.



Regarding the use of central bank digital currencies (CBDCs) for wholesale use, Panetta said that there was often some confusion. He noted that wholesale CBDCs have “existed for decades” and that “it has provided efficient digital infrastructures for the settlement of transactions between banks in central bank money.”



He refers to wholesale CBDCs as the settlement of interbank transfers and related wholesale transactions in central bank reserves. He then goes on to point out how wholesale and retail CBDCs differ, before describing how to modernize wholesale payment systems.



The solution to the challenge of modernization is distributed ledger technology. However, he states that experiments must prove that the technology provides its touted benefits.



Working with external companies on user interfaces



The ECB will be working with external companies to begin prototyping user interfaces for the digital euro. The bank said in mid-September that it was working with five companies to develop potential user interfaces for the currency.



The purpose of the prototyping was to “test how well the technology behind a digital euro integrates with prototypes developed by companies.” It is not expected that these prototypes will be used in later phases of the project.



The prototyping is expected to be finished by the first quarter of 2023. It will focus on specific use cases, like e-commerce payments.



A digital euro inevitable?



The ECB and the European region, in general, have been working on the CBDC with increasing intensity over the past 18 months. It has come to accept that a CBDC will be useful and even touts a lot of benefits over typical cryptocurrencies.



A digital euro bill is expected in early 2023, which comes a long time after the ECB first began considering an exploratory phase for the CBDC. Still, it could be years before the digital euro launches, though it is seemingly an inevitability at this point.
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