The German Bundesbank and the Massachusetts Institute of Technology (MIT) have agreed to conduct a joint research project on central bank digital currency (CBDC). Together with the MIT Digital Currency Initiative (DCI) research group, Bundesbank experts will explore new technologies that could potentially be used in the development of a CBDC. MIT's DCI is one of the world's leading research groups in this field.
“We are working intensively on innovative topics that also concern us here in Europe, such as reconciling security and privacy requirements with the objectives of a central bank digital currency,” said Bundesbank President Joachim Nagel. We at the Bundesbank are pleased to carry out research on this important topic with such a competent partner as MIT
The results of the joint research project will be published and are intended to contribute to increasing knowledge about the use of CBDCs both in Europe and worldwide.
“Private digital payment solutions often use third-party services that gain access to consumers' payment data, which they can use for business purposes,” Nagel says.
This is not just about targeted advertising, but about the possibility of discrimination, manipulation and the destruction of financial privacy.
The digital euro, as conceived by the Bundesbank and DCI, strives to be different. It aims to become the digital equivalent of cash, offering the same level of anonymity as physical currency.. The Bundesbank says security measures will be in place, including potential limits on holding digital euro accounts to prevent financial fraud.
A digital euro based on reliable and secure technologies has the potential to simplify cross-border transactions, helping to create a more efficient and inclusive financial ecosystem. It could also become a bulwark against the rising tide of private digital currencies.. These private alternatives, while offering convenience, raise concerns about control of the money supply and potential dominance by a select few tech giants.