EU Finance Ministers Say Digital Euro Will Bring Additional Privacy Safeguards

Central bank digital currencies (CBDCs) are going to play a major role in global finance. The European Union (EU) is working aggressively in this regard. On Monday, April 4, finance ministers from the EU bloc said that Digital Euro will bring enhanced privacy for smaller transactions.

However, they noted that chances of complete anonymity are still off the table. Besides, the EU is looking at ways to tie payment innovations to anti-money laundering (AML) rules. The EU said that this will apply to private cryptocurrencies as well as Digital Euro. But there isn’t any formal discussion on whether to issue central bank digital currency (CBDC).

Speaking to the press, Irish Finance Minister Paschal Donohoe said that Digital Euro should “accommodate privacy concerns”. However, he added that new rules will also be “counteracting the use of digital euros for unwarranted purposes”. Donohoe further suggested:

“A risk-based approach could be followed allowing for more privacy for less risky and smaller transactions and vice versa”.

Fabio Panetta, a prominent ECB executive board member has further added that Digital Euro “would provide people with a level of privacy equal to or higher than that of private digital solutions”.

Consultations on the Digital Euro Legislation

Lawmakers at the European Commission will do further consultations on legislation that would be required to support the new Digital Euro. But the Commission further warned that an unduly centralized system can aid spying and continue troubling mass surveillance, reports CoinDesk. Furthermore, EU lawmakers have been proposing AML checks for crypto and stablecoins.

European Commission’s Paolo Gentiloni said, “A completely anonymous digital euro is not desirable”. Last week the European Parliament passed a controversial rule on digital assets. It mandates exchanges to collect the sender/recipient’s private information even for small value transactions.

The ECB is also working out a way to introduce Digital Euro as a payment option. It added:

“… we are getting a clearer picture of what citizens and merchants want, so we can fine tune all the design features of a digital euro before any potential issuance. Legislators have a key role to play …”.

Christine Lagarde, President of the European Central Bank (ECB) said that they need to expedite the process on Digital Euro. This decision comes as other economies are making an aggressive move into it. As per reports, the ECB shall introduce the Digital Euro bill in early 2023.