On the site of the Council of the European Union on 16 January a statement of the Eurogroup on the digital euro project was published. According to the statement during the discussions in the EU the following issues were raised, in which the privacy concerns of citizens are mentioned:
- A digital euro should complement, and not replace cash, and should guarantee access to central bank money for euro area users in times of increased digitalisation in payments . A digital euro should be safe and resilient, ensure a high level of privacy, be easy and convenient to use and widely accessible to the public, including in terms of costs for end-users. Ministers also called for considering the environmental implications of the digital euro design.
- To succeed, the digital euro should ensure and maintain users’ trust, for which privacy is a key dimension and a fundamental right. At the same time, the Eurogroup also considered that the design of a digital euro should comply with other policy objectives such as preventing money laundering, illicit financing, tax evasion, and ensuring sanctions compliance. A risk-based approach could be followed to allow for more privacy in the case of less risky transactions, which could ensure a wider adoption of the digital euro among citizens with a stronger preference for privacy. The Eurogroup also supports the exploration of an offline functionality which would serve a wider range of use cases and also contribute to financial inclusion by facilitating the use by citizens in different scenarios.
- A digital euro should aim to safeguard the financial stability of the euro area. Potential risks to financial stability should be limited, for example by imposing holding limits and constraints in the design of the digital euro, while maintaining its attractiveness as a means of payment. The parameters of such features should be further analysed and discussed based on a thorough quantitative analysis and their implementation should take into account the prevailing economic and financial environment. The design and introduction of a digital euro should not impair the ability and the independence of the European System of Central Banks in ensuring monetary transmission in order to fulfil its price stability mandate.
- Ensuring a pan-European reach of the digital euro whilst also catalysing innovation in the financial sector and complementarity with private solutions should be a priority. The digital euro ecosystem should leverage the strength and experience of public and private participants and build on European infrastructure. Whilst further work is needed on the precise allocation of competencies, we consider that supervised intermediaries could play an important role in the digital euro ecosystem.
- The digital euro could be a building block of the future architecture for state-of-the-art payment solutions. To this end, it could allow for initiating a payment automatically when predefined conditions are met – meaning that users would be able to program payments. As money however, digital euro should at all times and throughout the euro area be convertible at par with other forms of the euro, such as banknotes and commercial bank deposits. The digital euro therefore cannot be a programmable money .
- Appropriate regulatory measures, including granting the digital euro legal tender status, should be considered in order to ensure consistency with cash and to make digital central bank money widely accessible for retail use to all end-users in the euro area, whilst taking into account the distribution of the costs and required technologies.
- The digital euro should focus as a priority on the needs and specificities of the euro area. Interoperability with other Central Bank Digital Currencies should be an important feature of the digital euro, including for cross-currency transactions. This will also take into account the development of CBDCs by other jurisdictions, in order to reap the potential benefits of faster, cheaper and safer cross-border transactions. On the other end, the risks associated with the use of a digital euro outside the euro area must be mitigated and monitored.
 See for instance the Study on the payment attitudes of consumers in the euro area (SPACE).
 There would for example be no restrictions in the types of goods and services to be purchased, or restrictions in time when a digital euro can be used.
According to the statement a high level of privacy should be ensured (first bullet).
The digital euro should ensure and maintain users’ trust, for which privacy is a key dimension and a fundamental right. At the same time the design should comply with other policy objectives such as preventing money laundering, illicit financing, tax evasion, and ensuring sanctions compliance (second bullet).
The Eurogroup states that users would be able to program payments, but that the digital euro “cannot be a programmable money” (fifth bullet).
Bert Slagter at the National Privacy Conference 2023
(Privacy First / ECP | Platform voor de InformatieSamenleving)
The digital euro is one of the subjects of the National Privacy Conference 2023 on 25 January. The conference is held in Dutch. Bart Slagter makes a presentation on the digital euro, that is introduced as follows (machine translation):
Bert Slagter presentation on Central Bank Digital Currency (CBDC) and privacy.
The ECB is building the digital euro. This is digital money issued by the central bank, and thus a digital variant of cash. But will it also have the pleasant features of cash, such as privacy, neutrality and inclusiveness? The two extremes of the spectrum make the most noise. One side says the digital euro is meant to restrict freedoms and influence behaviour, while the other thinks the digital euro is completely harmless – after all, the government has our best interests at heart. Who is right?
In this talk, we explore the different types of digital money, look at the preliminary design of the digital euro and discuss the implications for European citizens’ privacy.
- All posts on this blog on the digital euro are found here. Read for instance EDPB’s opinion on Europe’s digital euro and AML/CFT (10 July 2022) and Is the digital euro the final end of privacy of payments? | ECB (16 August 2021).
- Giovanni Buttarelli on 28 January 2019 published Privacy in a Cashless World on the EDPS site.