EU Council Endorses Digital Euro Versions Amid Financial Innovation

The Council of the European Union has endorsed the European Central Bank's design for a digital euro, which includes both online and offline functionalities. This decision was made public on Friday, with ECB President Christine Lagarde stating that the design is ready for legislative action by EU lawmakers.

The digital euro is intended to be issued by the ECB and can be utilized at any time, even without an internet connection. The offline version is designed to enhance privacy by preventing observers from linking multiple activities to the same user, with transaction data remaining on the devices of the direct participants.

Payments will be processed through near-field communication, requiring devices to be in close proximity. Experts have raised concerns about the enforceability of this proximity requirement and the potential for relay attacks, which could complicate the secure use of the digital euro.

Additionally, while the offline digital euro aims for privacy, it will still be linked to registered identities for anti-money laundering purposes. The next steps involve the European Council and European Parliament assessing the Commission proposal and determining its legislative path.