Crooks may prefer offline euro CBDC over cash, warns report

Core Insights - The use of offline central bank digital currencies (CBDCs) may present greater criminal risks compared to cash, necessitating tailored regulations for each CBDC variant [1][2][4] Group 1: Risks and Regulations - Offline digital euro payments could increase risks related to anti-money laundering and combating the financing of terrorism compared to online payments or traditional bank deposits [2][5] - The European Union is set to limit cash payments to €10,000 by 2027 to combat money laundering, but it remains undecided whether a similar cap will apply to a euro CBDC [4][5] Group 2: Consumer Preferences and Functionality - European citizens favor a CBDC with offline functionality for privacy and the ability to transact without internet access, utilizing technologies like near-field communication or Bluetooth [3][4] - The BIS report indicates that illicit actors may prefer offline digital euros for illegal transactions due to the cumbersome nature of cash [4][5] Group 3: Legislative Developments - The European Parliament has recently supported the development of a digital euro, marking a significant step towards its implementation [5][6] - Lawmakers express the necessity of a digital euro to compete with private and non-EU payment digitization efforts, particularly in response to the rise of stablecoins pegged to the US dollar [6][7]