A digital euro would have better privacy than private systems, an ECB executive said.

European Central Bank (ECB) Executive Board member Piero Cipollone spoke before the European Parliament's Committee on Economic and Monetary Affairs about the preparation of the Digital Euro. He outlines four issues the central bank is facing and how the ECB can ensure public access to a free common payment system.

According to Cipollo, the ECB The European Central Bank has started looking for infrastructure providers for its digital currency (CBDC). If we start looking for suppliers only after that decision, our preparedness will suffer. [to launch the digital euro] It's done,” Cipollone said on Feb. 14, adding that agreements will be flexible with legislative and technological developments. Additionally:

“Only legal entities that have registered offices in the EU and are controlled by such entities or EU citizens will be eligible to participate in the procurement process.”

This could be the fate of Amazon's future participation in the project. He was selected to create an e-commerce prototype for CBCC, but another call for applicants has since gone out.

Second, Cipollone discussed the Digital Euro Handbook, i.e., “a uniform set of rules, standards and procedures for the Digital Euro, which will ensure its viability.” The digital euro should act like cash, Cipollone said. This frees users from dependence on international payment processors and provides equal service throughout the Eurozone.

Cash and the digital euro have the same goal: to ensure that everyone, regardless of their income, can pay in any part of their daily life, said board member Piero Cipollone. We must protect this fundamental right throughout the euro area pic.twitter.com/CuTzL9uAbi

— European Central Bank (@ecb) February 14, 2024

Cipollone compared the digital euro infrastructure to real railways, which could be used by various private companies while belonging to the government.

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The independent, non-profit European Monetary and Financial Forum published a paper on February 15 highlighting the problematic implications of making the digital euro legal tender. In particular, he emphasized legal issues regarding the status of private payment providers integrated into the Eurosystem. He also called the concept of legal tender (a method of payment recognized by the courts and necessary for admissibility in court) “barbaric antiquity”.

Safeguards are being built into the design of the digital euro to maintain financial stability, Cipollone continued. The digital euro will be interest-free to avoid competition with savings institutions. There will be restrictions on public holdings of digital euros and restrictions on businesses and financial institutions. A solution will be provided to link CBCC wallets to bank accounts to ensure transactions are done without prepaying the wallets.

Finally, Cipollone touches on the digital euro and privacy. he promised:

“The digital euro allows people to pay online with high levels of privacy.

To keep cash and make offline digital euro payments as private as money, transaction details are known only to the payer and payee. Online, the ECB will accept “less anonymous data” necessary for operations such as settlement, and users will have more control over their data than private payment systems currently offer. Digital Euro offers state-of-the-art cyber security.

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