The European Central Bank (ECB) is once again pushing for the issuance of a digital euro, but it faces skepticism from EU lawmakers regarding privacy protection and potential risks to commercial banks.

ECB board member Piero Cipollone stated on Thursday at the parliamentary economic committee that the digital euro "will ensure that all Europeans can use a free and widely accepted digital payment method at any time, even in the event of significant disruptions."

Some lawmakers are concerned that digital currencies may not protect user privacy and believe that central bank-supported accounts could undermine the private sector.

Since 2023, the European Parliament has been reviewing legislation related to central bank digital currencies (CBDCs), but the process has been delayed due to political concerns and the upcoming 2024 elections.

Cipollone noted that the core of the EU's digital payment system mainly relies on non-EU suppliers, which could affect the "ability to act quickly and independently in times of crisis."

He positioned the digital euro as a backup solution in the event of cyberattacks or network disruptions and mentioned the U.S. efforts to promote dollar-backed stablecoins.

Cipollone stated that the digital euro would complement physical cash, which remains key to resilience and inclusivity; he also added that digital payments have now "become an essential part of daily life," and the government has a responsibility to ensure their availability.

Some lawmakers expressed concerns about the privacy implications of the digital euro and worried that EU citizens might choose to open accounts with the ECB rather than commercial banks, as the former appears to be safer.

Regarding privacy, Cipollone emphasized that the central bank "will not know any information about the payer and the payee" and stated that the offline solutions for digital currency "will protect personal privacy as effectively as cash."

Pierre Pimpie argued that the digital euro could lead to the draining of private bank accounts and objected to the ECB's authority to set user account limits. He pointed out that banks might raise these limits during a crisis.

Cipollone stated that the central bank would "set account limits based on strict analysis"; he also added that if businesses and wealthy individuals "see a crisis emerging in Europe, they can buy stablecoins denominated in other currencies in just a second."

"By then, the digital euro will be our least concern," he added.

Cipollone indicated that the ECB assumes that legislation related to the digital euro will be introduced in the second quarter of 2026.

The three main EU institutions need to approve the digital euro, including the Parliament, the European Commission, and the European Council. Negotiations among the three parties could last for several months.

Once the legislation is passed, it could be as early as mid-2026. Subsequently, the ECB will need to establish and test the digital currency infrastructure, a process that could take up to three years. If there are no delays, it is expected to be officially launched around 2029.

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Original article: “ECB Reiterates Push for Digital Euro, EU Lawmakers Remain Skeptical”

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