Eurozone finance ministers pledge support for digital euro project and talk privacy

Finance ministers from eurozone countries have reaffirmed their support for efforts to prepare for the potential launch of a digital euro. At the same time, the single currency area’s monetary authority has sought to reassure future users that the new currency will “preserve privacy by default and by design”.

The Eurogroup remains involved in the development of the digital euro, but believes that many decisions are political.

The finance ministers of the EU member states that have adopted the common European currency, the Eurogroup met Monday in Brussels to mark Croatia’s accession to the eurozone and discuss current issues – from the economic situation to the coordination of fiscal policies in the eurozone.

One of the topics discussed was the progress of the initiative to issue a digital version of the euro. In a statement adopted by the forum, government representatives pledged their continued participation. Paschal Donohoe, chair of the informal format, said:

What we plan to do is to continue our political engagement with the ECB and the Commission as they move forward with their processes, because what the Eurogroup has recognized today is that many of the decisions that await are inherently political.

“The Eurogroup considers that the introduction of a digital euro as well as its main features and design choices require political decisions that should be discussed and taken at the political level“The joint statement stresses the need for respective legislation approved by the European Parliament and the EU Council.

While reaffirming their commitment to support the project, which is still in its investigation phase that began in mid-2021, the ministers also stressed that any future decision on the possible issuance “would come only after further exploration in a possible realization phase.“

As a result of their discussions, the group members emphasized that a digital euro should complement, not replace, cash, among other recommendations. The central bank digital currency (CBDC) should come with a high level of privacy, they also said and explained:

To succeed, the digital euro must guarantee and maintain the trust of users, for whom privacy is an essential dimension and a fundamental right.

ECB says European digital currency will guarantee privacy of payments

“Preserving privacy by default and by design“was one of the stated goals in the report”Digital Euro – Stocktake“Also published this week by the European Central Bank (ECB). Presenting its view on the issue, the regulator said that the digital euro “will guarantee the privacy of personal data and payments” and detailed:

The ECB will not have information about people’s assets, transaction history or payment habits. Data will only be accessible to intermediaries for regulatory compliance purposes.

The Eurozone monetary authority also emphasized that its CBDC will not be a programmable currency, while noting that lawmakers will have the final say on the balance between privacy and other public policy objectives. The ECB also hinted that greater privacy may be allowed for less risky, offline transactions.