# Taming the ‘new wild west’: how biometrics can help the ECB deliver a secure digital euro
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-06-23
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Future of Digital Euro: Security Concerns and Consumer
Meta Description: Discover how Europe is exploring the potential of a digital euro, from easy, contactless payments to security concerns and the need for education and regulation.
URL: https://financedigest.com/taming-the-new-wild-west-how-biometrics-can-help-the-ecb-deliver-a-secure-digital-eurohtml

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_By_ **_Vince Graziani,_** _CEO, IDEX Biometrics_

Interest and acceptance of crypto and digital currencies are increasing, with national media, institutional finance, and even government circles discussing how to adopt cryptocurrency technology. China launched the e-CNY in 2021, and the UK parliament has recently launched an [All Party Parliamentary Group (APPG)](https://www.marketsmedia.com/uk-parliamentary-group-launches-for-crypto-and-digital-assets/) to discuss what role digital assets will play in the UK, where already three million adults are known to own cryptocurrency. The [European Central Bank](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") (ECB) has also begun to explore the future of crypto, commissioning a project to investigate the potential of a digital euro.

[A two-year investigation](https://www.ecb.europa.eu/paym/digital_euro/html/pubcon.en.html), concluding in October 2023, is taking place to determine the feasibility of a central bank digital currency (CBDC) for Europe. It is carrying out a detailed exploration into what a [digital euro](https://www.financedigest.com/digital-euro-will-be-free-but-limited-in-scope-ecb-says.html "Digital euro will be free but limited in scope, ECB says") might look like, how it could be designed and distributed to markets, retailers and the public, and what legislation is required.

Focus groups for the [ECB investigation show that consumers want the digital euro](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows") to be as flexible as the fiat euro, and to be functional anywhere within the euro zone, as well as online. Instant, easy and contactless payments are also very high on the wish list of functionalities, which follows the decrease in cash purchases observed during the pandemic. [Research participants](https://www.marketsmedia.com/uk-parliamentary-group-launches-for-crypto-and-digital-assets/) envisage a ‘one-stop solution’: they have a vision for a single device that will reduce the need for multiple cards, mobile phones, and computers, and will also provide access to a range of payment options.

**How can a [digital euro ensure](https://www.financedigest.com/42-of-retailers-say-payment-over-time-solutions-are-very-important-to-ensuring-future-digital-innovation.html "42% of retailers say payment-over-time solutions are ‘very important’ to ensuring future digital innovation") security?**

While there is [demand for a convenient digital](https://www.financedigest.com/veraviews-welcomes-hoopla-digital-as-a-demand-partner.html "VeraViews Welcomes Hoopla Digital as a Demand Partner") currency, the commission, and the public also have security concerns surrounding cryptocurrencies. Cyber hacks have impacted the sector since its start. Regulation is also minimal, unlike conventional [financial institutions](https://www.financedigest.com/a-cloud-migration-guide-for-financial-institutions.html "A Cloud Migration Guide for Financial Institutions") and there is little recourse if something goes wrong.

The [second biggest crypto hack in history](https://www.forbes.com/sites/jonathanponciano/2022/03/29/second-biggest-crypto-hack-ever-600-million-in-ethereum-stolen-from-nft-gaming-blockchain/?sh=5081206e2686), with more than $600 million worth of Ethereum currency recently hit the gaming-focused blockchain platform Ronin Network. Initial investigations show that the hack went unnoticed for a week, and it is believed that the hacker accessed the funds through hacked [private keys](https://www.financedigest.com/2023-fintech-prediction-secure-and-private-data-usage-is-key.html "2023 FinTech Prediction: Secure and Private Data Usage is Key").

This 2022 hack is even bigger than the legendary [Mt. Gox cryptocurrency exchange hack](https://www.euronews.com/next/2022/04/03/from-ronin-to-mt-gox-these-are-crypto-s-biggest-hacks-and-heists-since-bitcoin-was-created) which led to the company’s bankruptcy and serious requests to regulate the industry. Whilst regulation is underway, it is still in its infancy. Just this month, Fabio Panetta, a member of the executive board at the ECB, referred to the digital currency rush as the ‘new wild west’.

Although CBDCs [are different](https://finance.yahoo.com/news/difference-between-cbdc-bitcoin-090023060.html) from cryptocurrencies, governments will have to ensure funds are secure and regulated as they develop a national digital currency. It’s also important that the public has access to digital currency education to ensure that a new national CBDC will be universally welcomed by the public. The security issue must be addressed to [give people confidence to use this purely digital money](https://www.financedigest.com/nearly-half-of-parents-still-give-pocket-money-to-their-adult-children.html "Nearly half of parents still give pocket money to their adult children") alongside their conventional fiat funds.

In addition, [virtually all European countries have aging populations](https://www.worldatlas.com/articles/countries-with-the-largest-aging-population-in-the-world.html). Elderly as well as other less [financially savvy demographics sometimes struggle to adopt new technology](https://www.financedigest.com/shakedown-on-horizon-for-financial-technology-world.html "Shakedown on horizon for financial technology world"). The digital euro, along with any other central [bank digital](https://www.financedigest.com/digital-experience-and-security-the-crucial-combination-for-banks.html "Digital experience and security – the crucial combination for banks") currencies must be inclusive, easy-to-use and secure.

**Biometrics are inclusive and easy-to-use**

[Biometric technology](https://www.financedigest.com/the-rise-of-biometric-technology-in-banking.html "The rise of biometric technology in banking") can be leveraged in support of these pre-requisites. Used in conjunction with ‘cold wallet’ crypto storage (in simple terms, this is external currency storage, not connected to the internet), biometric sensor technology can provide high levels of [privacy and security](https://www.financedigest.com/tesla-to-warn-of-data-privacy-risk-from-car-security-cameras-in-germany.html "Tesla to warn of data privacy risk from car security cameras in Germany") by linking the card to the owner through their fingerprint. Biometric fingerprint sensors have long been used on smartphones and are now being used in payment cards by banks – including [BNP Paribas](https://www.thalesgroup.com/en/markets/digital-identity-and-security/banking-payment/customer-cases/BNP-Paribas-biometric-payment-card) and Sweden’s [Rocker](https://www.fintechfutures.com/2022/03/swedish-challenger-rocker-introduces-fingerprint-sensor-biometric-payment-card/), as well as for [crypto firms](https://www.biometricupdate.com/202203/blocks-hardware-wallet-to-use-fingerprint-biometric-authentication). Hence the technology is in [place to provide the same levels of security for a digital](https://www.financedigest.com/the-evolution-of-loyalty-and-its-place-in-the-digital-age.html "THE EVOLUTION OF LOYALTY AND ITS PLACE IN THE DIGITAL AGE") currency.

A CBDC wallet, through a biometric smart card could act as a [bank account](https://www.financedigest.com/are-banks-ready-for-the-new-accountability-regime-in-2016.html "ARE BANKS READY FOR THE NEW ACCOUNTABILITY REGIME IN 2016?") with in-built security, which would give millions of previously unbanked, or underbanked people instant access to digital finance and services

**The need for privacy**

Notably, the ECB consultation highlighted that privacy was considered the most important feature of a digital euro by both citizens and professionals. Given the previous data leaks in the cryptocurrency space, this is understandable. But it could also hold the public back from the full potential of a [digital payment](https://www.financedigest.com/can-i-please-speak-to-someone-why-building-relationships-is-still-crucial-in-digital-payments.html "“Can I please speak to someone?” Why building relationships is still crucial in digital payments") solution.

The commission found that [when confronted with a specific choice](https://www.ecb.europa.eu/pub/pdf/other/Eurosystem_report_on_the_public_consultation_on_a_digital_euro~539fa8cd8d.en.pdf) between an offline digital euro focused on privacy or an online one with innovative features and additional services, respondents will generally opt for an offline solution focused on privacy. This indicates a clear need for a stronger, privacy-focused CBDC solution and education to support consumers to make the most of a digital euro.

On enrolment to a biometric wallet, the owner’s fingerprint image is immediately transformed into an abstract biometric template. This is then matched and stored in the secure element of the EMV chip. The owner’s biometric data never leaves the wallet and cannot be subject to a data breach.

**A** [digital currency future](https://www.financedigest.com/smarter-safer-stronger-cybersecurity-is-now-critical-to-digital-future.html "Smarter, safer, stronger cybersecurity is now critical to digital future")

There is little doubt that [digital currencies will feature in our future](https://www.financedigest.com/future-of-finance-2023-digital-transformation.html "Future of Finance 2023: Digital Transformation"). In this fast-moving environment, where regulation is finally beginning to catch up, the introduction of a digital CBDC euro may be sooner than we think.

Fortunately, tried and tested biometric [technology is now available to transform this major transition to digital](https://www.financedigest.com/you-cant-get-faster-than-that-spring-statement-update-delivered-digitally-as-it-happens-with-app-driven-technology.html "‘You Can’t Get Faster Than That’ – Spring Statement Update Delivered Digitally As It Happens with App-driven technology") currency into a secure, inclusive, and user-friendly process. The public’s vision of a ‘one stop [payment solution’ could soon be realised](https://www.financedigest.com/2021-predictions-realising-the-value-of-payments-transformation.html "2021 Predictions: Realising the Value of Payments Transformation") by the ECB. The 2023 investigation findings could help tame the ‘wild west’ of payments for good.


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