“Experts have warned Europe’s Central Bank Digital Currency CBDC) designers that the recent design models being adopted could make privacy difficult to achieve. – DNA Crypto.”
No formal policy decision has been made to issue the euro in digital form; however, significant speculation has fuelled the idea. The matter was to be discussed effectively by the Euro finance ministers, and advice was to be > obtained from the European Commission.
Last year, a European Central Bank consultation found that ensuring the digital euro protects citizens’ privacy is its top priority. An individual’s spending habits may reveal private information, including lifestyle, political affiliations, and tastes.
However, as things stand, privacy issues don’t seem to concern European CBDC designers. Emphasis has been placed on other concerns citizens might have, e.g., global acceptance and safety. In addition, Fabio Panetta, a European Central Bank board member, recently added a “Trade-off” to those objectives.
A policy intended to inform the finance minister’s meeting on the issue argued that a fully anonymous digital currency would raise serious concerns.
Queries on Privacy
The policy says that the European Central Bank would be granted access to all transactions to fulfil its duties. These duties include settling payments and overseeing financial transactions, among others. In addition, the policy states that payment data should be made available to all central entities for oversight.
Panetta dismissed the state’s claims that snooping was the motive for this policy. He added that the European Central Bank has no interest in using the data provided for commercial gain.
Panetta said that, unlike firms whose only motive is profit, the ECB would follow the policy to the letter. According to Panetta, privacy is more of a political issue than a technical problem. He made this statement in response to a suggestion to process small transactions and payments offline and keep them confidential. He added that this was a matter for governments and lawmakers, not central bankers.
However, experts have warned against Panetta’s characterisation, arguing that an over-centralised financial system makes it almost impossible to attain and maintain high levels of privacy. Marina Niforos, a professor at HEC Paris Business School, told CoinDesk that citizens had a right to worry about the extent of government control over data. She also dismissed Panetta’s claims that privacy concerns were tools of profit-driven firms. Niforos warned that the move was not as easy as it sounded. It requires an intensive ecosystem remaking that some nations were not prepared for.
A study by the ECB found that many people are unaware of what a digital euro is or how it would be used; this is one of Panetta’s primary obstacles. Faustine Fleuret, the CEO of ADAN, told CoinDesk that the digital euro posed more risk than opportunity. He added that the digital euro could hinder innovation by displacing euro Stablecoins, which require fluid rules to sustain decentralised finance.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
