Digital Euro 2025: Opportunity or risk for our privacy?

Digital Euro 2025: Opportunity or risk for our privacy?

From 2025, the digital euro will be introduced, which could represent a significant change in European payments. The digital euro is presented as a modern and secure complement to the traditionally used cash. This new form of central bank money is intended to ensure the availability and usability of means of payment in an increasingly digitalized world. However, critics and data protection advocates warn of possible disadvantages, particularly the loss of anonymity in everyday life. Some also fear total traceability of consumer behavior and possible government access to personal data, as exxpress.at reports.

The most important features of the digital euro are the ability to pay anywhere and simple, real-time, contactless payments, especially between private individuals. While cash continues to dominate, surveys show that consumer preferences are increasingly shifting towards digital payments. Cash usage in the euro area was only 51% in 2023, while card payments increased to 33%. The digital euro could also play an important role for payments between the state and individuals, such as for social benefits or taxes, according to the European Central Bank.

Data protection and anonymity

A central topic in the discussion about the digital euro is data protection. Proposals are being considered to give users more privacy when paying small amounts in order to comply with anti-money laundering guidelines. However, complete anonymity is not considered viable in preventing illegal activities. When using the digital euro for the first time, users must identify themselves and only the absolutely necessary data should be visible for the respective transactions.

The legislative bodies play a crucial role in establishing the digital euro as legal tender, which the Bundesbank is also discussing intensively. The Eurosystem task force is working on the technical and regulatory aspects of the introduction. Additional focus groups are planned to obtain feedback on the user experience and continue dialogue with various stakeholders.

Economic impact

By introducing the digital euro, the Eurosystem could not only reduce dependence on non-European payment providers, but also create a simple and convenient payment experience for around 350 million people in Europe. The need to adapt to these new framework conditions is further reinforced by the increasing number of digital transactions and the increasing acceptance of card payments.

Although the introduction of the digital euro is planned for 2025, many challenges still lie ahead. The legislative process is expected to last until fall 2025, dampening hopes for early implementation. Uncertainty also remains about the actual improvements announced by the government to ease budget burdens, particularly given the high housing and cost of living inflation that many find unbearable.