Date: 14 February, 2023

The need for a digital euro stems from several factors. European citizens would benefit from a digital currency by having a more versatile and convenient means of conducting transactions. The COVID-19 pandemic accelerated the decline in the use of physical cash, and people are increasingly relying on digital payment methods. A digital euro would offer individuals the option to use a digital version of cash, providing flexibility and choice in their payment methods.
Digital currencies have gained increasing traction, and unlike bitcoin, the digital euro would function as a central bank digital currency (CBDC), essentially serving as electronic cash. The objective is to provide consumers with an additional Europe-wide payment option, following the use of coins and banknotes. The European Commission is now considering the introduction of the digital euro, which would be a virtual iteration of the currency issued by the European Central Bank, and it could be utilized without any associated fees in addition to physical cash within the eurozone.
Financial intermediaries such as banks and Financial services providers may facilitate digital euro transactions for in-store payment like other digital payment methods; the routine payments are not expected to undergo significant changes, according to Maria Demertzis. The ECB will introduce it with limited amounts, restricting individuals to no more than €3,000 or €4,000 in their accounts; it may not substantially impact consumers.
If the aim is to make the digital euro closely resemble cash, then efforts should be made to ensure it maintains a high level of anonymity,” Demertzis emphasized. “The ECB has indicated that anonymity will be preserved for smaller payment amounts. However, as transactions involve larger sums of money, anonymity may no longer be guaranteed.”
The European Central Bank conducted a public consultation on the digital euro, and the primary concerns expressed were related to privacy (43%), which was the most prevalent concern, followed by security (18%), usability across the Eurozone (11%), the absence of additional fees (9%), and offline usability (8%).
Data protection associations have also raised concerns about issues related to privacy, anonymity, and payment tracking.
Commissioner Mairead McGuinness raises questions about monitoring the spending when using the digital euro. However, she also clarifies, “The ECB is not interested in how you spend your money, but they want to provide you with the option of having a digital version of cash. So, you can use a digital euro payment offline. When you use your digital wallet offline, it’s a private transaction. Of course, if you’re engaging in an e-commerce transaction, your bank will be aware that you’re using your digital euros for that purpose.

References:

https://www.cnil.fr/en/digital-euro-what-stake-privacy-and-personal-data-protection