European Central Bank adviser defends Amazon's role in digital euro project

European Central Bank adviser defends Amazon’s role in digital euro project

Jürgen Schaaf, senior management advisor for market infrastructure and payments at the European Central Bank, on Wednesday defended the European Union’s decision to make Amazon one of the five companies testing the digital euro.

“Front-end prototyping experiments are driven by technology considerations. Schaaf told a panel discussion hosted by the Association of Financial Markets in Europe that the five companies selected for this were the most relevant in terms of our testing and technology trial needs.

Earlier this month, the European Central Bank selected five companies to help develop user interfaces for a potential digital euro.

Companies include US e-commerce company Amazon, Spanish multinational CaixaBank, French payments platform Worldline, Italian payments-focused bank Nexi, and EPI (European Payments Initiative), a consortium of eurozone banks. The five companies were selected from among 54 potential companies that responded to the European Central Bank’s call for participants.

Each of the five companies has been tasked with focusing on one use case for the digital euro. Amazon is expected to test its e-commerce payments app. CaixaBank is set to develop a mobile app that simulates the steps users will take to transfer digital euros to their bank accounts. Worldline will explore offline payments between individuals. Finally, EPI and Nexi will work on retail payments at point of sale.

The ECB said the purpose of the prototyping exercise was to “test how well the technology behind the digital euro is integrated with prototypes developed by companies.” The bank aims to simulate transactions in a real environment, and all transactions will be processed using the Eurosystem interface for a realistic experience.

While Amazon’s mission includes developing payment prototypes for e-commerce, Schaaf told the committee that the results of this work will not be automatically entered into a follow-up beta phase. This indicates that Amazon may not continue to favor access, according to the report.

However, Schaaf admitted that he did not want to see a “political” exclusion of US companies in the digital dollar project. US retailer Amazon was one of five companies selected by the European Central Bank to develop a user interface for a potential digital dollar earlier this month.

“Our desire to strengthen our monetary independence in the digital euro does not mean that Europe will close all its doors to retailers from abroad,” Schaaf said. “There is no protectionist intent behind it.”

The digital euro project is moving forward

In April, the European Central Bank invited fintech companies to apply for a prototyping exercise, and 54 companies expressed interest. Last week, the European Central Bank narrowed the list to five companies based on the capabilities identified in the areas chosen in the prototyping exercise.

The developments are showing that the digital euro is making significant progress even though the European Central Bank is adopting a cautious process. The simulation exercise is part of the investigation phase to determine the feasibility of a regional CBD that began in October 2021 and will end in October 2023.

At the end of the two-year exercise, the European Central Bank will decide whether or not to start developing a digital euro. The investigation includes the central banks of all participating countries and private companies interested in sharing opinions on the proposed direction of the operation.

Image source: shutterstock

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