On June 25, the European Central Bank (ECB) provided an update on its two-year preparatory phase for the digital Euro Central Bank Digital Currency (CBDC). This phase, scheduled to conclude in October 2025, places a strong emphasis on privacy and data protection. Nevertheless, certain aspects of the digital currency have sparked concerns regarding potential privacy infringements.
Crypto entrepreneur and investor Daniel Batten raised these concerns on June 26, suggesting that the digital Euro could facilitate increased surveillance by banks, enable deplatforming, and account freezing. Furthermore, he highlighted the ECB's plan to limit the amount of digital Euro individuals can hold, aimed not at preventing it from being a store of value but to moderate its use in that capacity. This approach ensures banks maintain their crucial role in providing efficient credit to the economy.
The digital Euro represents programmable money on a blockchain, regulated by smart contracts, which grants the ECB control over how much currency individuals can hold. The overarching goal is to phase out cash and transition all financial transactions online for easier monitoring and traceability. Batten previously indicated that the ECB, along with other banks, is working to undermine crypto and financial freedom.
Interestingly, the digital Euro includes an 'offline functionality' feature, designed to offer users a cash-like level of privacy by enabling payments without an internet connection via pre-funded accounts. However, critics argue that this still necessitates the use of the central bank’s database, thus not fully delivering on the privacy claims.
The decision to issue a Euro CBDC hinges on the completion of the European Union legislative process and the preparatory phase. Fintech entrepreneur Kim Dotcom, at the onset of this phase in October 2023, warned against the digital Euro, describing it as a 'financial surveillance and control tool.'
Europe is part of a global movement among several countries striving to eliminate cash and shift to central bank-controlled digital currencies. According to the Atlantic Council, only Nigeria, the Bahamas, and Jamaica have fully deployed a CBDC to date. Currently, 36 CBDC pilots are underway worldwide, including in Europe, China, Russia, Brazil, India, Japan, South Africa, and Australia.$BTC