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The European Central Bank (ECB) is eager to build out services around a potential digital euro, as indicated by its bids for providers. More than half of the $1.3 billion contract budget is for offline payments development and is an important aspect of the retail digital euro. There are various other features for which the ECB is seeking providers.

Around 100 economies, including the 27-nation European Union, are considering issuing a central bank digital currency (CBDC). The ECB is exploring the digital euro, with the aim of preparing for one. There is pressure on the ECB to deliver on legislative promises, which may have sparked the recent calls for providers. Offline payments are a crucial component of the digital euro and economic challenge to implement.

The $1.3 billion provided is a multi-year contract. This means that the ECB expects the providers to deliver a top-quality product that meets their specific requirements. Offline payments is a high priority for the ECB and potential providers are required to have significant expertise to bring these offerings to market.

Enabling offline payments is a significant challenge in implementing CBDCs. The ECB is planning two digital euros for retail payments, one of which will be exclusively for offline use. There are challenges to building a user-friendly product that meets the ECB’s high expectations. The EU legislative proposals include the outlawing of interest for the digital euro, and listing offline payments among the requirements from day one.

It is unknown which providers the ECB will choose to build the digital euro services. The ECB’s prior collaboration with U.S. giant Amazon was met with criticism from EU lawmakers. It’s possible that the ECB will prefer to work with traditional finance players based in Europe this time, rather than more “exotic” options.

The digital euro project has moved to a preparation phase as the ECB looks to finalize a rulebook and select providers to bring the CBDC to life. The decision on issuing a euro comes after a legislative conclusion in the European Parliament, and proposals are facing some degree of political pushback, so approval is not guaranteed.



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