Privacy concerns regarding the digital euro abound as the European Central bank tests the waters for a central bank digital currency.
The European Central Bank has published the results of a public consultation on a potential digital euro as the institution inches closer to deciding whether to formally study such an initiative.
According to a Wednesday announcement, the ECB received more than 8,200 responses to its public digital euro consultation — a personal record for the bank regarding participation in a public consultation. Of the total responses, 47% came from Germany, with a significant amount also coming from Italy and France, accounting for 15% and 11% of total responses, respectively.
The majority of respondents said that privacy was the most desired feature for a potential upcoming digital euro, accounting for 43% of all citizens and professionals taking part in the consultation. “Privacy is considered the most important feature of a digital euro by both citizens and professionals participating in the consultation, especially merchants and other companies,” the ECB noted in its report.
From the consultation, respondents noted security and the ability to pay across the eurozone as top priorities at 18% and 11%, respectively. 9% of respondents stressed the importance of removing additional costs, while 8% emphasized the need for offline usability of a digital euro.
“Most citizens in the sample opt for privacy, even if that would restrict usability to offline transactions and limit the alternative of receiving additional innovative services or even with a combination of both offline and online functionalities,” the ECB noted.
Launched in October 2020, the ECB’s digital euro public consultation has confirmed the ECB’s initial findings, providing valuable input for Eurosystem’s decision in mid-2021 on starting a formal investigation into a digital euro. ECB executive board member Fabio Panetta stated:
“A digital euro can only be successful if it meets the needs of Europeans. We will do our best to ensure that a digital euro meets the expectations of citizens highlighted in the public consultation.”
According to ECB president Christine Lagarde, the whole process of adopting a digital euro could take up to four years should the ECB’s governing council and the European parliament decide to move forward with the initiative.
The question of user privacy has emerged as one of the biggest problems associated with central bank digital currencies, puzzling governments about how to prevent illicit financial activity while also preserving confidentiality.
While countries like the United States prefer not to move forward with a CBDC until this problem is solved, other countries such as China have been actively experimenting with a CBDC. After launching the first digital yuan pilots in 2020, the Chinese central bank described its “controllable anonymity” approach, which aims to provide maximum privacy protection to China’s CBDC users.
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Author: Helen Partz