Privacy and the Digital Euro

The ECB has published a blog ‘Making the digital euro truly private’, with privacy an important concern for CBDCs. A strong focus on privacy will never convince sceptics and the realities of know your customer and anti-terror funding legislation have to be accommodated.

The offline version of a digital euro will be close to cash and its focus on low value payments makes privacy easier to achieve. The online version will act more like today’s bank cards.

The risk around the offline digital euro is less about privacy than whether the state could stop people topping up their wallets. The online version is highly vulnerable should an authoritarian regime be in power.

Offline digital euro privacy

For the offline version, compliance checks take place when you move cash into or out of your wallet. There are, of course, criminal risks and so anti-fraud procedures will be needed to protect citizens from crime.