The Eurosystem is actively developing a digital euro to align central bank money with contemporary payment preferences and bolster Europe's financial independence. This initiative aims to provide a digital retail payment option issued by the ECB and national central banks throughout the euro area, offering widespread accessibility and complementing cash transactions. Beyond convenience, the digital euro seeks to enhance monetary sovereignty by reducing reliance on non-European payment providers dominating the market.
Following an investigation phase launched in 2021, the ECB's Governing Council approved a two-year preparation phase until October 2025. This phase focuses on refining the digital euro rulebook, selecting platform providers, and conducting extensive testing on technical aspects like offline functionality. Concurrently, the Eurosystem collaborates with EU legislators to align technical progress with legislative discussions, ensuring the digital euro meets rigorous standards of quality, security, privacy, and usability. The decision to proceed with issuing a digital euro awaits completion of the EU legislative process, with ongoing adjustments to its design anticipated based on legislative outcomes.
Privacy is a cornerstone of the digital euro project, adhering to a ‘privacy by design’ ethos since its inception. The Eurosystem places significant emphasis on safeguarding the privacy and data protection of digital euro users, reflecting public priorities within the project's framework. Offline digital euro payments ensure that only the payer and payee have access to personal transaction details, enhancing privacy levels akin to cash transactions.
For online transactions, advanced privacy measures are implemented to prevent the Eurosystem from directly linking transactions to individuals. Techniques such as pseudonymisation, hashing, and encrypted communication between payment service providers (PSPs) and the Eurosystem bolster data segregation and protect user identities. PSPs access transaction details solely for legal compliance, such as anti-money laundering regulations, ensuring user consent is required for additional data usage. Robust rules and oversight mechanisms are in place to uphold user information integrity, overseen by independent data protection authorities in compliance with EU regulations.
Effective fraud detection and prevention are paramount for instilling trust in the digital euro. The Eurosystem, in designing the digital euro, emphasizes the need to integrate robust fraud prevention measures while ensuring privacy protections. Collaborating with industry experts, the ECB has evaluated emerging anti-fraud technologies capable of leveraging pseudonymised end-user data effectively. Payment service providers (PSPs) will continue conducting necessary fraud checks similar to current digital payment practices, ensuring secure digital transactions.
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