Digital euro framework seeks to quell privacy concerns

1 min read


The digital euro is edging closer to reality, despite concerns over the project’s privacy risks and functionality.

The European Commission on Wednesday proposed a legal framework for the electronic currency. Under the draft legislation, digital euros would be accepted for transactions anywhere in the eurozone, but cash would remain safeguarded as a form of payment. It would then be up to the European Central Bank (ECB) to decide if, and when, to issue the digital currency.

“In the euro area, the digital euro would offer a digital payment solution that is available to everyone, everywhere, for free,” said Valdis Dombrovskis, the European Commission’s executive vice president.

According to Dombrovskis, the project will modernise payments, enhance financial inclusion, and support innovation. He also emphasised the need to protect the eurozone from rival digital payment systems.

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If other central bank digital currencies were allowed to be used more widely for cross-border payments, we would risk diminishing the attractiveness of the euro… and the euro could become more exposed to competition from alternatives such as global stablecoins,” he said.

Unlike cryptocurrencies, the digital euro would be backed by a central bank. That could reduce volatility, but it’s triggered anxieties about government control.

These concerns are prevalent across the bloc. In a consultation last year, 43% of respondents said privacy was what they wanted most from the digital euro. The next most desired features were security (18%), usability across the euro area (11%), absence of additional costs (9%), and offline use (8%).

Share of citizens per country who ranked privacy as most important feature