Today the European Central Bank (ECB) published a blog post entitled “Making the digital euro truly private.” Worldwide one of the biggest concerns of potential users of central bank digital currencies (CBDCs) is that a CBDC provides a Big Brother way for the government to snoop on you. The current planned ECB design would be pretty robust in preserving privacy. However, even with a strong privacy design, some challenging privacy issues will be hard for most central banks to address.
Before touching on those issues, it’s worth noting that there will be two versions of the digital euro. The offline version aims to be as close to cash as possible and is designed for smaller payments. Online payments are closer to typical card or bank payments today.
The recent European elections show that future national governments could be very different from our current ones. Given Europe’s World War II history, it’s not a stretch to ponder what might happen in a less benevolent world. What if the digital euro has real traction and cash is barely used? How easy would it be to change the digital euro system to break the privacy protections currently being carefully crafted?
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