The European Central Bank (ECB) has published its initial progress report on the development of a central bank digital currency (CBDC) as of June 24.
Privacy and security are primary concerns in the report. The ECB has committed to using pseudonymization, hashing functions, and encryption to protect individual transaction data from being tracked.
The ECB’s framework also stipulates that payment service providers must obtain explicit consent from consumers before using their financial data for any commercial purposes.
The report outlines methods for facilitating offline transactions. It mentions the possibility of conducting transactions directly between parties without needing an intermediary, using payment devices such as smartphones and potentially new “smart cards” that might be battery-powered or rely on relays to synchronize transactions with the CBDC blockchain.
The report concludes with a timeline for the newly established “Rulebook Development Group.” This group is tasked with drafting the technical and regulatory framework for the CBDC. The first draft is expected to be completed by the end of 2024 after consulting with service providers, infrastructure developers, and the public.
Summary Review: The ECB is making strides in developing a CBDC, focusing on privacy, consent, and offline transaction capabilities, with a detailed framework expected by the end of 2024.
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