The European Central Bank took a further step today towards launching a digital version of the euro that would let people in the 20 countries that share the single currency make electronic payments free of charge and securely.
“The next phase of the digital euro project – the preparation phase – will start on 1 November 2023 and will initially last two years,” the ECB said
It added that the phase it would involve some “testing and experimentation”.
“We need to prepare our currency for the future,” ECB president Christine Lagarde sad.
She said a digital euro would “coexist alongside physical cash, which will always be available, leaving no one behind.”
Earlier, the European Union’s data protection watchdog called for stronger privacy safeguards in EU draft legislation to underpin a digital euro.
The European Commission has proposed a draft law that would give legal underpinning to the digital euro, but consumers are concerned it will displace cash and allow authorities to track spending.
Approval of the draft law has been slowed down to give more time to address concerns that the digital euro will lack the anonymity of cash for low-value transactions.
The European Data Protection Board (EDPB) said it “strongly recommended” adding to the draft law a privacy threshold for online transactions using the digital euro “under which neither offline nor online low-value transactions are traced for purposes of anti-money laundering and for combating the financing of terrorism.”
The draft law should also “further clarify” the data protection responsibilities of the ECB and of payments services providers (PSP).
“This includes the legal bases the ECB and PSP should rely upon, and the types of personal data they should process for the issuance, distribution and use of the digital euro,” the EDPB said.
The board said it strongly welcomed that digital euro users will always have the choice to pay in digital euros or in cash.
“A high standard of privacy and data protection is instrumental in citizens’ trust in this new digital currency,” said Irene Loizidou Nicolaidou, the EDPB’s deputy chair.