The European Central Bank has published a summary of the results of its digital euro prototyping work. The study explored the offline use of a simulated digital euro and its interoperability with existing payment systems.
The project was part of the second phase of Eurosystem preparations for a potential digital euro launch in the fall of this year. The trial phase lasted from July 2022 to February 2023.
Eurosystem has developed a centralized payment engine for an application called N€XT that uses the UTXO data model. Five prototype customer interfaces representing different use cases were provided by private companies. Personal storage wallets have also been tried.
The UXTO model preserved customer privacy by using one-time UTXO addresses that did not reveal wallets. User experiences were the same for custodied and non-custodied wallets.
Use cases for offline transactions were more problematic. Aiming to gain “more in-depth information on how the combination of hardware and software protocol can prevent double spending and ensure the finality and non-repudiation of the deal,” the report concluded.
Questions remain as to whether current technology will provide a secure, production-ready offline solution in the short to medium term.
I’m honored to have @EU_Commission President Ursula @vonderlayan with us here in Frankfurt as we mark the ECB’s first quarter of a century.
Let’s keep working together for a united and peaceful Europe. pic.twitter.com/6smP7soWxX— Christine Lagarde (@Lagarde) May 24, 2023
Simultaneously with the report, the ECB published a “Market Research Final Report” on the digital euro.