The Digital Euro Will Provide Users with Privacy and Data Protection Says ECB Executive
- European Central Bank (ECB) executive board member states the digital euro will be “more private” than global stablecoins issued by corporations in a direct shot at the Facebook-backed Diem project.
- Speaking to FT, Fabio Panetta also stated the digital euro, which he termed ‘riskless,’ could take two years in the legislative processes before the actual development starts.
Over the past year, several concerns have arisen on how the European Central Bank proposes maintaining user’s privacy once the digital euro launches. In an interview with FT, Panetta stated the ECB would be the best institution to hold onto users’ private monetary data as it has no commercial interest in selling it.
Apart from the threat of illicit activities and money laundering, data security was a key issue that Europeans raised against the digital currency in a recent survey. Over 43% of the respondents view private data security as the key ingredient in successfully launching the digital euro, the report further stated. Panetta stated,
“We have no commercial interest in storing, managing, or monetizing the data of users of a digital means of payment.”
“People feel safer if their information is in the hands of the central bank – a public institution – than if it is in the hands of private companies.”
This is in line with Europe's General Data Protection Regulation (GDPR) recommendations, a data privacy body within the ECB, earlier this week in a letter. The GDPR letter states that for users to trust the government with their monetary data and private data, high levels of data protection are required while designing the digital euro. The letter further reads,
“Such concerns should be taken into account from the design stage. In addition, the EDPB recommends that the EU body in charge of the design of the project performs a high-level data protection impact assessment.”
Asked on how the ECB will enhance the privacy of users’ monetary transactions without compromising on regulations on anti-terrorism, money laundering, and illicit activities, Panetta stated the bank could allow “very small payments to have truly anonymous payment transactions.” He said,
“For very small amounts, we could permit truly anonymous payments, but in general, confidentiality and privacy are different from anonymity.”
In the next four years, the digital euro could launch if everything is approved to start development, Christine Lagarde, ECB President, stated earlier in the year. Notwithstanding, the bank released a statement this month warning of the stability risks of central banks if they don’t launch a digital euro.