Digital Euro Will Have Privacy Safeguards, European Finance Ministers Say
Governments are discussing policy options for the central bank digital currency though no formal decision to issue one has been made yet.
A new digital euro will offer greater privacy for smaller transactions but won't allow for full anonymity, officials said after a meeting of finance ministers from the currency bloc on Monday.
No formal decision has yet been taken whether to issue the central bank digital currency (CBDC), but the European Union is already considering how to tie payment innovations to anti-money laundering rules, both for the digital euro and private cryptocurrencies, such as bitcoin.
Ministers had agreed that any new format for the euro should "accommodate privacy concerns," Irish Finance Minister Paschal Donohoe told reporters, but new rules will also be "counteracting the use of digital euros for unwarranted purposes."
"A risk-based approach could be followed allowing for more privacy for less risky and smaller transactions and vice versa," said Donohoe, who chairs the ministerial meetings known as the Eurogroup.
Offline payments for low value-payments made between people who are physically close, such as in stores and between friends, would help include those cut off from the financial system, he said, backing recent proposals made by the European Central Bank's Fabio Panetta.
The European Commission is due to present a consultation soon on any legislation that might be needed to back up the new digital euro, but has also been warned that an unduly centralized system could represent a "honeypot" of data for spies and constitute troubling mass surveillance.
"A completely anonymous digital euro is not desirable," the European Commission's Paolo Gentiloni told reporters.
The European Parliament last week agreed on controversial new anti-money laundering rules that would require identification of those participating in even small-value payments of cryptocurrencies like bitcoin, which many in the industry have said would invade privacy and stifle innovation.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.