European Finance Ministers say the Digital Euro will have privacy protections

European governments are debating policy possibilities for a central bank digital currency, but no formal decision has been made to launch one.


Irish Finance Minister Paschal Donohoe told reporters, but new rules will also be "counteracting the use of digital euros for unwarranted purposes.
Irish Finance Minister Paschal Donohoe

Officials stated during a meeting of the currency bloc's finance ministers on Monday that a new digital euro will offer improved privacy for smaller transactions but will not provide complete anonymity.


Although no formal decision on whether to issue the central bank digital currency (CBDC) has been made, the European Union is already thinking about how to attach payment innovations to anti-money laundering legislation, both for the digital euro and private cryptocurrencies like bitcoin.


Ministers had agreed that any new format for the euro should,


"accommodate privacy concerns," Irish Finance Minister Paschal Donohoe told reporters, but new rules will also be "counteracting the use of digital euros for unwarranted purposes."

"A risk-based approach may be used, with more privacy for less hazardous and smaller transactions and vice versa," said Donohoe, who leads the Eurogroup ministerial sessions.


He backed previous ideas made by the European Central Bank's Fabio Panetta, saying that offline payments for low-value payments conducted between persons who are physically close, such as in stores and between friends, will help include those shut off from the financial system.


The European Commission is expected to issue a consultation on any legislation needed to support the new digital euro soon, but it has also been cautioned that an overly centralized system might serve as a "honeypot" of data for spies, resulting in disturbing mass surveillance.


"A completely anonymous digital euro is not desired," said Paolo Gentiloni of the European Commission.


Last week, the European Parliament approved controversial new anti-money laundering rules that will require identification of anyone who participate in even small-value bitcoin payments, a move that many in the industry have criticized as invading privacy and stifling innovation.