The European Central Bank (ECB) prefers a “transparent” digital euro rather than ensuring a higher level of privacy for its users, a presentation dedicated to the project suggests. In the document, the monetary authority explored different privacy options for the euro area digital fiat currency.
ECB says digital euro does not want users anonymity
A report by the European Central Bank has revealed the regulator’s “preliminary view” on the privacy-related features of the digital euro. Meanwhile, a project to issue a central bank digital currency (CBDC) in the euro zone is still under investigation.
Recognising that maintaining control over their personal data and upholding privacy as a fundamental right is important for Europeans, monetary authorities say the move to digital payments means less privacy by default. Although it is possible to keep some cash-like features in the digital version of the euro.
An ECB report highlighted privacy as a key issue for future digital euro users, but the bank now says it needs to be assessed in the context of other EU policies. Among them, Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) work. Elaborating on the matter, the regulator noted:
User anonymity is not a desirable feature as this would not control circulation and prevent money laundering.
Digital euro data will be transparent rather than private
The ECB further insists that the Eurosystem, comprising the ECB and the central banks of eurozone member states, should have access to digital euro transaction data to verify payments. In addition, anonymized aggregated data should be available for statistical and surveillance purposes and to combat fraud and crime.
In a presentation brought to public attention this week by crypto venture capital advisor Patrick Hansen, the ECB listed three privacy options for a digital euro platform. The first, dubbed the “Currently Applicable Baseline Scenario,” aims to ensure that personal and transactional data is transparent to intermediaries that need to comply with AML and CFT regulations.
The second approach would provide a higher degree of privacy for micropayments, and the last envisions the privacy of offline transfers, where financial intermediaries or authorities would not be aware of low-value balances and amounts. The ECB acknowledged that the latter two “ideal options” could be investigated with European lawmakers.
What are your thoughts on the privacy options for the digital euro reviewed by the European Central Bank? Let us know in the comments section below.
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