As the digitization of the economy accelerates, tech giant IBM has shared its insights on successfully implementing a digital euro. Five members from IBM Consulting outlined recommendations for the European Commission to consider in refining its digital euro legislation.
Entering the competitive and multifaceted Eurozone payments landscape requires a comprehensive and strategic approach. Simplicity, the team suggests, will be an instrumental factor in the initial adoption of the digital currency. This could involve building on existing financial infrastructure – a point already inherent in the Commission’s plan which could further be expanded.
With payment intermediaries likely having a role in the acceptance of a digital euro, it becomes necessary that the digital currency design accommodate their needs as well. IBM sees potential in planning for a diverse and multi-level ecosystem of intermediaries that could better serve smaller participants.
As an additional step to ensure seamless integration and promote competition, IBM proposes the standardization of application programming interfaces (APIs). Protocols that ensure strong offline privacy – already part of the EC proposal – could further be extended to online activities. IBM posits that a harmonized set of rules consistent with existing digital payment privacy measures could bring about end-to-end transaction privacy for the digital euro.
Despite the non-essential nature of distributed ledger technology in creating a digital euro, IBM recognizes the significant benefits of blockchain technology in this arena. The operation of such technologies, they reckon, does not inherently need to be more environmentally impactful than non-blockchain-based systems.
Ultimately, resilience is key. Beginning with a minimal viable product and using a sandbox to navigate the future digital euro’s complex operating environment can spell success for the digital currency. ‘Slow and steady’ is the mantra from IBM in this regard, concluding that a manageable, incremental approach can facilitate a smoother entry into the market.
However, as we ink the blueprint for an increasingly digital economy, the concerns of transparency, security and regulatory clarity persist. While these are not new challenges, the stakes are amplified by the scale and complexity of the environment in question. As the digital euro’s future unfolds, these are the issues that will bear close watching.
Source: Cointelegraph
