The Council of the European Union has endorsed the European Central Bank’s initiative to launch a digital euro that will be available in both online and privacy-enhanced offline forms.

On a recent Friday, a document was released outlining the EU council’s stance on the digital euro, emphasizing collaboration with the ECB to roll out both versions concurrently.

ECB President Christine Lagarde stated:

“It’s now for the European Council and certainly later on for the European Parliament to identify whether the Commission proposal is satisfactory, how it can be transformed into a piece of legislation or amended.”

Limitations of the Offline Digital Euro

Documents indicate that the offline digital euro functions similarly to cash, allowing transactions without linking activities directly to users. However, transaction data will remain solely between involved parties. This system will enable authorized devices to execute transfers of the central-bank-certified digital euro tokens during face-to-face transactions.

Nonetheless, a breach known as a relay attack, where an attacker uses proxy devices to hijack the NFC signal over the internet, could undermine some online usages.

An expert analysis by the European Data Protection Board acknowledged that:

“the available countermeasures are very limited.” The document concludes that maintaining physical proximity as a feature of cash is not feasible in a digital currency.

Private Yet Different from Cash

The offline version of the digital euro, along with the private keys for managing it, will be stored securely within certified devices such as mobile gadgets and smart cards.

For further reading, check out these related articles: Crypto urges SEC to see the good in blockchain privacy tools and SEC commissioner says crypto is ‘helping to nudge reassessment’ on privacy.