Piero Cipollone, a member of the European Central Bank (ECB) executive board, believes the digital euro will have better privacy than private systems.
He discussed four challenges confronting the central bank and how the ECB would ensure the general public could utilize a free standard payment method.
The European Central Bank has begun searching for infrastructure providers for the European Central Bank digital currency, according to Cipollone. “Our preparedness would be jeopardized if we began evaluating potential suppliers only after the decision [to introduce the digital euro] is reached,” Cipollone stated on February 14. Furthermore, he said contractual obligations would remain adaptable concerning legislative and technological advancements. Also, in addition:
“Only legal entities with registered offices in the EU and controlled by such entities or EU nationals will be eligible to participate in the procurement process.”
Possible repercussions for Amazon’s future involvement in the endeavor. It was selected to develop an e-commerce component prototype for the CBDC; however, another application has been solicited since then.
Cipollone then elaborated on the digital euro framework, which he defined as “a unified collection of regulations, benchmarks, and protocols designed to guarantee the seamless execution of the digital euro.”
According to Cipollone, the digital euro should function similarly to physical currency. This would ensure uniform service across the eurozone and liberate users from reliance on international payment processors.
Digital euro infrastructure, according to Cipollone, is analogous to physical train rails that are state-owned but also accessible to private entities.
The European Money and Financial Forum, an independent, non-profit organization, released a paper on February 15 that drew attention to the problematic ramifications of legalizing the digital euro.
The text placed significant emphasis on legal matters about the integration of private payment providers into the euro system. Additionally, the legal tender concept, consisting of court-recognized and accepted forms of payment within a jurisdiction, was characterized as “a barbaric archaism.”
Cipollone proceeded by stating that safeguards are being integrated into the design of the digital euro to preserve financial stability. Interest-free treatment of the digital euro would prevent it from competing with savings institutions.
Prohibitions would apply to the possession of digital euros by enterprises and financial institutions and restrictions on their public disclosure. Establishing a connection between CBDC wallets and bank accounts would make it possible to conduct transactions without pre-funding the wallets.
Cipollone concluded by discussing the digital euro and privacy. He made a promise:
“A digital euro would allow people to make online payments with very high standards of privacy, higher in fact than what commercial solutions currently offer.”
While offline digital euro payments would maintain the confidentiality of currency transactions, the information regarding a given exchange would be accessible solely to the payer and payee.
The ECB would obtain the “minimal set of pseudonymized data” required for settlement and other duties online. Additionally, users would have more authority over their information compared to the current state of private payment systems. Additionally, the digital euro would feature cutting-edge cybersecurity.
