European Central Bank Unveils First CBDC Update
25 Jun, 2024 ● Crypto News
The European Central Bank (ECB) issued its inaugural update on the progress of a central bank digital currency (CBDC) on June 24.
The update emphasized privacy, with the ECB committing to the use of pseudonymization, hashing functions, and encryption to prevent tracking individual transactions.
Furthermore, the ECB’s framework for the CBDC stipulates that payment service providers must obtain explicit consent from consumers before using their financial data for commercial purposes.
The report also described methods for offline transactions, including direct exchanges between parties without an intermediary, using smartphones and potential new "smart cards" that could be powered by batteries or use relays to connect with the CBDC blockchain.
The cover page for the ECB's first CBDC progress report. Source: European Central Bank.
The ECB anticipates the "Rulebook Development Group" will complete the initial draft of the technical and regulatory framework for the CBDC by the end of 2024, following consultations with service providers, builders, and the public.
Privacy and human rights concerns continue to dominate discussions about the global adoption of CBDCs, especially as opposition grows within the cryptocurrency community.
At the recent Oslo Freedom Forum, incidents of governments seizing assets to suppress dissent were highlighted, illustrating the potential for abuse with government-run blockchain currencies.
A 2023 Trezor report found that 73% of people were concerned about privacy and the excessive control a CBDC could give governments over consumer behavior.
Critics believe the risks associated with CBDCs outweigh their benefits compared to stablecoins, questioning the necessity of central bank digital fiat and highlighting broader issues with CBDC implementation.
In the U.S., opposition to CBDCs is strong, with former President Trump committing to blocking their introduction. This issue has become increasingly partisan.
In May, the U.S. House of Representatives approved the CBDC Anti-Surveillance State Act, a bill addressing the significant threats posed by centrally controlled digital currencies to freedom in democratic societies.
Sources:
https://cointelegraph.com/news/european-central-bank-first-cbdc-progress-update
