Global: ECB Executive Highlights Privacy Advantages of Digital Euro Over Private Systems

Piero Cipollone, a member of the European Central Bank’s executive board, addressed the European Parliament Committee on Economic and Monetary Affairs, shedding light on the forthcoming digital euro and its commitment to user privacy. Cipollone emphasized four key aspects, outlining the ECB’s approach to infrastructure, rulebook creation, financial stability, and privacy concerns.

Firstly, Cipollone discussed the ECB’s proactive search for infrastructure providers for the European Central Bank digital currency (CBDC). Highlighting the importance of readiness, he stressed the necessity of securing agreements with eligible entities, limited to those with registered offices in the EU controlled by EU nationals.

Secondly, he delved into the creation of a digital euro rulebook, aiming for a unified set of rules, standards, and procedures. Drawing a parallel with physical cash, Cipollone emphasized the objective of freeing users from reliance on international payment processors, ensuring equal service across the eurozone.

The third aspect focused on safeguards incorporated into the digital euro design to maintain financial stability. Key measures include an interest-free digital euro to avoid competition with savings institutions, limits on public holdings, and prohibitions on businesses and financial institutions holding it. Additionally, a mechanism would link CBDC wallets with bank accounts, facilitating transactions without prefunding wallets.

Finally, Cipollone addressed the critical issue of privacy. He assured that the digital euro would provide a high standard of privacy for online payments, surpassing current commercial solutions. Offline transactions would mimic the privacy of physical cash, with transaction details known only to the payer and payee. Online transactions would offer enhanced user control, with the ECB receiving a minimal set of pseudonymized data for settlement purposes. The digital euro aims to outperform private payment systems in terms of user privacy and cybersecurity.

This comprehensive approach by the ECB aims to establish the digital euro as a secure, private, and inclusive means of payment within the eurozone.