ECB exec allays privacy concerns surrounding digital euro

In a recent meeting with the European Parliament’s Committee on Economic and Monetary Affairs, Piero Cipollone, a member of the ECB Executive Board, discussed the forthcoming digital euro , specifically its privacy features, infrastructure procurement, and operational standards.

Cipollone’s presentation emphasized the ECB’s proactive approach to collaborating with EU-based entities for the digital currency’s infrastructure. He added that all these entities are registered within the EU and controlled by an EU national.

Privacy concerns

Privacy considerations were a key focus of Cipollone’s remarks. He assured the Parliament that the digital euro would feature superior privacy protections compared to existing commercial payment solutions and include anonymous offline payment transactions.

The ECB executive detailed the planned privacy features of the digital euro, stating that it would collect only a minimal set of pseudonymized data necessary for operations such as settlement. This approach is intended to enhance online payment privacy, addressing public concerns over data protection in digital transactions.

For online transactions, the ECB would access only a necessary, pseudonymized data set for operational purposes like settlement, promising users greater data control than current private payment systems offer.

Moreover, according to Cipollone, the digital euro is designed with top-tier cybersecurity measures to safeguard user data and transactions.

Cipollone said the digital euro has been designed to mirror the accessibility and reliability of cash, thereby reducing reliance on global payment processors and ensuring uniform service across the eurozone. He added:

“Cash and a digital euro have the same objective: ensuring that everyone, regardless of their income, can pay in any situation of daily life. This is a fundamental right. And it should be protected in the same way in all parts of the euro area.”

He likened the digital euro’s infrastructure to public railways, suggesting it would be state-owned yet accessible to various private operators.

Implementation and stability

Cipollone also touched on the importance of a digital euro rulebook to ensure consistent implementation across the eurozone, aiming to reduce dependency on international payment processors by providing a uniform set of rules, standards, and procedures.

Addressing financial stability, the ECB executive outlined measures to prevent the digital euro from competing with traditional savings accounts, including interest-free holdings and restrictions on the digital euro’s accumulation by corporations and financial institutions.

He also mentioned plans to facilitate seamless transactions by linking CBDC wallets with bank accounts, circumventing the need for wallet pre-funding.

The dialogue between the ECB and the European Parliament is part of the preparatory phase for the digital euro, with the ECB providing technical input to co-legislators. The ECB’s efforts aim to prepare for a potential digital euro launch within a framework that prioritizes privacy, operational readiness, and financial stability.