European Union: Published EDPS TechDispatch 1/2023 on Central Bank Digital Currency

On 29 March 2023, the European Data Protection Supervisor (EDPS) published TechDispatch 1/2023 on Central Bank Digital Currency (CBDC). The publication highlights that central banks worldwide are exploring the potential launch of state-owned digital currencies in response to the growing popularity of digital payments, contactless transactions, cryptocurrencies, and e-commerce. The publication explains how CBDC operates as a digital form of publicly issued currency by a central bank, enabling individuals and businesses to conduct transactions and maintain savings accounts. One crucial aspect that sets CBDC apart from other electronic payment methods is its legal tender status. This means that within a jurisdiction, CBDC must be accepted as a valid form of payment, whereas other electronic payment methods can be refused. Central banks issue both physical and digital tokens directly. This, along with its legal tender status, distinguishes CBDC from private money and the numerous existing cryptocurrencies. The TechDispatch also emphasizes that privacy, data protection, and security are crucial considerations in the design choices of CBDC, as they significantly impact citizens' trust and acceptance.