Jürgen Schaaf, adviser to the European Central Bank’s (ECB) Senior Directorate for Market Infrastructure and Payments, on Wednesday defended the EU’s decision to make Amazon one of five firms to test a digital euro.

“Front-end prototyping experiments are driven by technological considerations. The companies that have been chosen for those five were the most appropriate in terms of the needs we have for technological tests and experiments,” Schaaf said in a panel discussion organized by the European Financial Markets Association.

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

The 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 euro area banks. The five companies were selected from a pool of 54 potential companies that responded to an ECB call for participants.

Each of the five companies is tasked with focusing on one use case for the digital euro. Amazon is expected to test the e-commerce payments app. CaixaBank has been in charge of developing a mobile application that simulates the steps that users will follow to transfer digital euros to their bank accounts. Worldline will explore offline payments between individuals. And finally, EPI and Nexi will work on retail payments at points of sale.

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

While Amazon’s task is to develop e-commerce payment prototypes, Schaaf told the panel that the results of this work would not automatically be included in the follow-up experimental phase. This suggests that Amazon may no longer have privileged 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 retail giant Amazon was one of five companies selected by the ECB to develop a user interface for a potential digital dollar earlier this month.

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

The digital euro project advances

In April, the ECB invited fintech companies to participate in the prototyping exercise, with 54 companies expressing interest. Last week, the ECB shortened the list to five companies based on specific capabilities in the areas chosen in the prototyping exercise.

Developments show that the digital euro is making significant progress, although the ECB is taking a cautious approach. The simulation exercise is part of the research stage to determine the feasibility of a regional CBDC that began in October 2021 and will end in October 2023.

At the end of the two-year exercise, the ECB will decide whether or not to start developing a digital euro. The investigation involves the central banks of all participating nations and interested private companies who share views on the proposed direction of the process.

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