The European Central Bank (ECB) has stated that a digital euro is still at least two years away, according to ECB President Christine Lagarde. Lagarde made the remarks in response to privacy concerns around the central bank digital currency (CBDC) during a session with lawmakers.
The ECB is set to make significant decisions on whether to proceed with preparations for the CBDC in the coming weeks. However, many members of the European Parliament, who would need to approve the plans, are expressing skepticism.
Lagarde noted that the ECB’s Governing Council would decide on further piloting of the project in October. She suggested that the pilot phase alone could take another two years before a final decision is reached.
Addressing privacy concerns, Lagarde stressed the importance of dispelling conspiracy theories surrounding the digital euro. She emphasized the need for the CBDC to offer privacy while avoiding complete anonymity. Additionally, Lagarde highlighted the importance of the digital currency being user-friendly, free, and accessible to everyone.
ECB Board Member Fabio Panetta has previously stated that no decision to issue the digital euro will be made until lawmakers and member governments agree on legislation outlining privacy measures for the CBDC. However, there are still reservations among stakeholders.
During the session, German centrist lawmaker Nicola Beer raised concerns about the implications of transaction and holding limits, as well as the requirement for identification, on privacy. Beer questioned whether these measures would hinder the acceptance of the digital euro, citing potential concerns about traceability and the impact on the commercial banking system.
In a recent development, the European Parliament announced that Germany’s Stefan Berger, an architect of the EU’s crypto licensing law MiCA, will guide the digital euro law through the parliament.
As the ECB continues to grapple with cybersecurity and privacy challenges, it is evident that significant work lies ahead before a digital euro becomes a reality. The concerns expressed by lawmakers demonstrate the need for careful consideration of privacy measures and their potential impact on acceptance and usage of the CBDC. Ultimately, finding the balance between privacy and transparency will be crucial to ensure the success of the digital euro.