ECB, green light for the digital euro: the preparatory phase will be completed by 2025

“We must organize our currency for the future” declares the president of the ECB. The EU privacy authority asks for clarification on how user identification will be processed

The second phase, the preparation phase, for the digital euro will start on 1 November 2023 and will initially last two years. Afterwards the Governing Council will decide whether to move on to the final phase of definition and launch of the new electronic money. This was announced by the ECB after the decision of the Board of Governors according to which this period “will involve the development of the rules and the selection of suppliers who could develop the platform. Furthermore, in this phase, tests and experiments will be conducted to create a euro digital”.

Digital euro together with cash

“We must prepare our currency for the future,” declared Christine Lagarde, president of the ECB. “We conceive a digital euro as a digital form of cash that can be used free of charge for any digital payment and that meets the highest standards of confidentiality” specifies Lagarde. “A digital euro would complement cash, which will always be available, so that no one stay behind” he concludes.

The EU privacy authority

The proposed EU regulation on the digital euro is good with respect to data protection and the fact that an offline mode is provided to minimize data processing. The European Data Protection Board and the European Data Protection Supervisor stated this in a joint opinion on the proposal. However, they ask to clarify how the identification of users of the digital euro will be processed.

Data protection

Less invasive measures are recommended with respect to the impact on data protection. The role of the ECB, national central banks and payment service providers in this context will also need to be defined, according to key data protection principles. The introduction of a privacy threshold for online transactions, below which they should not be tracked, is then “strongly” recommended.