When European Central Bank board member Fabio Panetta addressed the European Union’s Economic and Monetary Affairs Committee in April, he stressed the importance of privacy in any possible future deployment of CBDC.
The ECB had conducted a public consultation on the possibility of a digital euro, gathering the opinions of more than 8,000 individuals and businesses. Responses that have come back suggest that privacy was the primary concern surrounding the central bank’s issuance of a digital currency.
With 43% of respondents highlighting privacy as a fundamental requirement, Panetta said the digital euro could meet those requirements without relaxing security standards.
Other survey responses highlighted the need for a digital euro to ensure secure payments (18%), while others focused on cross-border payments within the European Union (11%) . Some respondents noted the need for low fees (9%) and the ability to use the system even when offline (8%).
“As I have already mentioned, privacy appears to be the most important characteristic of a digital euro. Protecting users’ personal data and ensuring a high level of confidentiality will therefore be a priority in our work, ”said Panetta.
Indeed, the ECB has been exploring techniques for strengthening privacy protection since even before the emergence of the concept of the digital euro. Preliminary research suggested that a digital system could still be monitored for any illicit activity, while still allowing transparency and confidentiality.
But while the ECB seems to be making all the right rumors about a possible CBDC deployment, not everyone agrees that the end result will be so rosy.
Former Apple product manager, and now Oasis Labs chief operating officer, Anne Fauvre-Willis, said the EU has been sympathetic to the concept of consumer privacy in the past. But it won’t matter much if the digital euro is issued on a centralized system.
“The EU has a good track record of protecting consumer privacy, but it’s still a centralized system,” Fauvre-Willis told UKTN, adding: “Instead of allowing this through a centralized bank, why not empower a decentralized protocol to do it instead?
If a digital euro were issued on the Ethereum blockchain for example, it would be subject to the same level of decentralization and autonomy as Ether (ETH), and all other tokens issued via Ethereum.
But the possibility for a central bank to cede all control of its money supply to a decentralized network seems extremely unlikely.
Additionally, humans’ natural desire to take the simplest route possible could see users flocking to the digital euro, regardless of how much privacy they give up in the process, says Fauvre-Willis.
“When it comes to people embracing the digital euro, unfortunately I think ease will trump just privacy,” said Fauvre-Willis.
“Privacy is a feature, but it’s not enough to make people change their behavior on their own. Instead, for those of us who truly believe in privacy, we must simultaneously strive to make compelling, life-changing products and in doing so, we must place privacy at the center of what we do. let’s manufacture, ”she added.
The ECB is still researching the possibility of a digital euro, with the final decision due by summer 2021.