The European Central Bank (ECB) is exploring options to develop its payments infrastructure and is studying solutions both with blockchain and without.
The main cause of this exploration has been the COVID-19 outbreak, which has caused the ECB to worry about its stimulus cash. The ECB is looking for a solution that can ensure that the cash reaches citizens quickly.
ECB explores digital euro
The bank published a blog post discussing the importance of a reliable payment system. The report focuses on solutions such as legacy systems. It also mentions blockchain-based technologies such as the digital euro.
The report was authored by a member of the bank’s executive board Fabio Panetta and highlights that the central banks need to ensure continuity of payment mechanisms, especially during periods of crisis.
The report praised the Target Instant Payment System (TIPS) that was launched in November 2018 by the ECB as a settlement layer for commercial banks. The report noted that the system could handle 2,000 transactions each second and was designed to settle over 43 million payments each day.
If the system is adopted at a large-scale, it can allow people and institutional entities to interact and trade with each other instantly. Furthermore, the platform will not have any business hour limitations nor any downtime during the weekend.
The report also stated that even prior to the pandemic outbreak, the ECB stressed that Europe should be “able to supply fundamental services such as electronic payments autonomously.”
As such, the ECB is studying solutions that can create systems catering to both e-commerce platforms, as well as brick-and-mortar stores. The digital euro is also being explored as part of this initiative, and Panetta noted that the COVID-19 experience would be considered while researching its viability.