The European Central Bank (ECB) has revealed privacy measures for its proposed digital euro. This is part of the ECB’s first progress report on developing a central bank digital currency (CBDC), released on June 24.
The ECB has promised to deploy a range of privacy-enhancing technology in order to avoid overreach by the government. These include pseudonymization, advanced hashing functions, and encryption features that will make it impossible to track transactions involving individuals.
ECB further stated that they understand the worries of the people, and explained that they aim to create digital euros that would address financial inclusion without sacrificing personal confidentiality.
In a move to secure consumer rights advocates, the ECB has also put out regulations for payment service providers. Under the proposed framework, these companies would be barred from using consumer financial data for commercial purposes without explicit consent from the individuals involved.
However, ECB is not stopping at only online transactions. The report also outlines methods for conducting offline payments, allowing users to transact directly without relying on third-party intermediaries.
In order to enhance this framework, the ECB has created a “Rulebook Development Group.” The first draft is scheduled to be delivered by the end of 2024, and it will follow extensive discussions with service providers, infrastructure builders, and the public.
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