According to CryptoPotato, the European Central Bank (ECB) released an update on June 25 regarding its two-year preparation phase for the digital Euro Central Bank Digital Currency (CBDC), which is set to conclude in October 2025. The ECB emphasized that privacy and data protection are its primary concerns. However, certain features of the digital currency have raised concerns about potential privacy infringements.
Crypto entrepreneur and investor Daniel Batten highlighted these concerns on June 26. He pointed out that the digital Euro would make it easier for banks to surveil individuals, deplatform them, and freeze their accounts. He also noted that the ECB would limit the amount of digital Euro individuals could hold in their accounts. The ECB stated that these limits are not intended to prevent the digital Euro from being a store of value, but to moderate its use in this capacity. This would ensure the role of banks in providing efficient credit to the economy.
The digital Euro is essentially programmable money on a blockchain governed by smart contracts, which gives the bank the ability to control how much of the currency people can hold. The ultimate goal is to eliminate cash and move all financial transactions online, where they can be monitored and traced. Batten previously stated that the ECB was among several banks working to undermine crypto and financial freedom.
The digital Euro also features an 'offline functionality' that would offer users a cash-like level of privacy, allowing payments without an internet connection using pre-funded accounts. However, observers noted that this would still require the use of the central bank's database, thus eliminating any privacy that the bank claims it provides.
The decision to issue a Euro CBDC will only be made after the European Union legislative process is completed and the preparation phase concludes. When the preparation phase began in October 2023, fintech entrepreneur Kim Dotcom warned about using the digital Euro, describing it as a 'financial surveillance and control tool.'
Europe, along with several other countries, is actively working to phase out cash and transition to a digital currency controlled by the central bank. As per the Atlantic Council, only three countries - Nigeria, the Bahamas, and Jamaica - have deployed a CBDC. There are currently 36 CBDC pilots ongoing, including in Europe, China, Russia, Brazil, India, Japan, South Africa, and Australia.