ECB Hands EU a Pro-Privacy CBDC Design: Will It Survive?
The European Central Bank (ECB) will enable blockchain-based settlement in central bank money in 2025 and is preparing for a digital euro launch, but implementation—especially privacy rules—requires EU legislative approval. The ECB aims for initial digital euro transactions by 2027 and potential issuance in 2029, assuming laws are passed in 2026. The digital euro will be available both online and offline, with the offline version mimicking cash by allowing device-to-device payments without third-party validation and strong privacy protection. The ECB insists on holding limits and no interest to protect banks’ roles. The digital euro aims to improve fragmented EU retail payments and cross-border transactions and prevent euro-zone currency risk from foreign stablecoins or tokenization. The ECB wants a non-programmable digital euro (no spending restrictions), but conditional payments are allowed. Privacy protections, particularly offline, are emphasized, but EU lawmakers’ recent push for expanded data retention and transaction tracking create uncertainty over final privacy safeguards. The digital euro's infrastructure will also support settlement with other CBDCs and digital assets.
