A digital euro must ensure a high level of privacy, EU policymakers say

European finance ministers believe the digital euro should be built on a “solid democratic basis,” with privacy being the key enabler for CBDC mass adoption.

Eurogroup, the informal body of the eurozone's finance ministers, said the digital euro should offer both privacy and transparency, as it needs to comply with policies to ensure sanctions compliance and prevent money laundering, illicit financing, and tax evasion while maintaining citizens’ trust.

In a statement released Monday, the group also emphasized that the design of CBDC cannot be programmable money, which can be interpreted as that there will be no restrictions on the types of goods and services that can be purchased with digital euro

“Depending on its design, a digital euro could play a key role in an increasingly digitalised economy by strengthening the open strategic autonomy of the European Union, reflecting the central geopolitical role played by payment systems, in fostering financial sector innovation and delivering benefits for citizens, businesses, and Member States, while preserving the role of central bank money as an anchor for our monetary system,” the statement read.

Read also: Blockstream CEO: CBDCs are systems of control, worse than bank accounts

According to the Eurogroup, a digital euro should complement, and not replace cash while being convertible at par with other forms of the euro, such as banknotes and commercial bank deposits. Its design should also take into account the environmental implications, ministers say.

The investigation phase of the digital euro — the EU Central Bank Digital Currency (CBDC) — was first announced in July 2021, and is expected to stay in that stage for 24 months. The ECB Governing Council will review the outcome of the investigation phase in autumn 2023 and decide on this basis whether to move to a realization phase.

The next Eurogroup meeting regarding the digital euro will take place on March 13, 2023.