The Central Bank of Cyprus has held its first focus session on the digital euro with payment service providers, namely banks, payment institutions, and electronic money institutions.
In a press release at the 24 October meeting, CBC notes that the welcoming speech on behalf of the Governor, Christodoulos Patsalides, was delivered by the Executive Director, George Karatzias, who stated that the session takes place at a momentous juncture, heralded on one hand by the preparations for the digital euro only five days before the Governing Council of the ECB decides on the project’s next steps, and on the other hand amidst intense legislative negotiations in Brussels for the “Single Currency Package”.
The Governor’s key message focused on the need to strengthen Europe’s resilience, and in specific on reducing the full dependency of consumers and businesses in Cyprus on non-European payment service providers. The Governor encouraged payment service providers to become well-versed with the “Digital Euro Rulebook” and to assess how it impacts the broader context of their digitalisation, innovation, and business models. Another equally important call from the Governor related to the wider participation of the Cypriot market in the second round of experimentation activities on the European Central Bank’s innovation platform.
The Director General of the Directorate General Payments, Stelios Georgakis, together with the Head of Policy and Oversight of Payment Systems Section, Stella Ioannidou, jointly presented the project status update and the forthcoming decisions, as well as key provisions of the “Single Currency Package,” which are of interest for payment service providers as future distributors and acquirers of the digital euro. According to the press release, among the main messages that were conveyed was the use of the digital euro infrastructure rails to ensure that any private payment solutions considered by the Cypriot market gain a pan-European rather than solely national scope.
The ongoing work of the Rulebook Development Group (RDG)
A keynote presentation was made by the representative of the European Central Bank, Patrick Papsdorf, Rulebook Development Manager, with respect to the establishment of a unified set of standards, procedures, and rules for digital euro payments across the euro area, in line with the provisions of the legislation currently under negotiation in Brussels. Papsdorf highlighted general aspects of the ongoing work of the Rulebook Development Group (RDG) and informed payment service providers about their participation in the digital euro scheme.
In particular, reference was made to the eligibility criteria, the onboarding process, the resulting obligations, the terms and conditions for termination or suspension of participation, as well as the procedures that are activated in the case of breaches. While a new version of the draft rulebook was delivered to the RDG it was clarified that it is sufficiently flexible to accommodate for changes arising from the legislative discussions on the draft digital euro regulation.
According to CBC, an important area of the presentation related to the rulebook structure and coverage of digital euro services, these being the management of access, liquidity, and transactions in digital euro. Highlighted were also the draft minimum user experience, illustrative user journeys and end to end flows. Papsdorf emphasised to the Cypriot market that adherence to the rulebook would ensure a standardised, secure, and high-quality user experience for all parties involved, while fostering innovation and competition across the euro area.
A panel discussion followed, in which representatives from the Central Banks of Greece, Estonia, Austria, and Cyprus took part. In particular, Sissy Papagiannidou, Rainer Olt, Asen Naydenov, and Stelios Georgakis examined a series of issues related to costs, network effects, where the value and usefulness of a payment system increase as more users get on board, perceived risks, resilience, and the path towards market readiness for the adoption of the digital euro. "These topics are important not only from a technical perspective but also hold strategic significance for Europe’s future", CBC notes.
(Source: CNA)
