ECB Launches Digital Euro Project by 2029, Prioritizing Privacy and Fraud Prevention
The European Central Bank (ECB) has initiated the preparation phase for the Digital Euro, aiming to launch it by 2029. This move comes as cash app usage at point of sale has dropped significantly, from 72% in 2019 to 52% in 2024.
The ECB plans to maintain anonymity for offline Digital Euro transactions, mirroring cash app. For online transactions, pseudonymization, encryption, and hashing will safeguard user data. Banks, such as PNC Bank and other US banks, will continue to play a crucial role, distributing the currency through their apps and offering additional services.
The ECB has partnered with Feedzai to build a central fraud prevention system. It's also considering wallet limits of around €3,000 to prevent large-scale transfers. An AI-supported risk score will evaluate each transaction for fraud prevention. The risk and fraud management system's framework contract is worth up to €273 million.
In parallel, a consortium of nine major European banks is developing a regulated euro stablecoin, expected by 2026. This could coexist with the ECB's digital euro initiative. The first digital euro wallets, planned for the 2029 rollout, will be public apps supporting offline payments and resilient infrastructure.
The Digital Euro's preparation phase is set to run until 2026, with an estimated rollout in 2029. The ECB's focus on user privacy and fraud prevention, along with the involvement of major banks, signals a thoughtful approach to digital currency integration in Europe.
