When Fabio Panetta, a member of the Board of Directors of the European Central Bank, addressed the European Union’s Committee on Economy and Money in April. underlined the importance of privacy in a possible future start of a CBDC.
The ECB had launched a public consultation on the possibility of a digital euro, drawing the opinion of more than 8,000 individuals and companies. The answers suggest that Privacy is the main concern when issuing a central bank digital currency.
Other survey responses highlighted the need for a digital euro for secure payments (18%), while others focused on cross-border payments within the European Union (11%).. Some respondents emphasized the need for low commissions (9%) and the possibility of using the system offline (8%).
“As I already mentioned, Data protection is the most important feature of a digital euro. Protecting users’ personal data and ensuring a high level of confidentiality will therefore have priority in our work.“Panetta explained.
Indeed, Even before the concept of a digital euro was introduced, the ECB had already investigated techniques for improving privacy. Preliminary research indicated that a digital system could be monitored for illegal activity while ensuring transparency and privacy.
However, While the ECB seems to be doing its best to start CBDC with privacy features, not everyone agrees that the bottom line is that good..
Anne Fauvre-Willis, former Apple Product Manager and current COO of Oasis Labs, notes that the EU has in the past supported the concept of consumer privacy. But that is of little use if the digital euro is spent in a centralized system..
“The EU has had good experiences with consumer privacy, but it is still a key system.”Fauvre-Willis told Cointelegraph, adding: “Instead of allowing a centralized bank to do this, you can enable a decentralized protocol.
For example, if a digital euro were spent on the Ethereum blockchain, it would be subject to the same degree of decentralization and autonomy as Ether (ETH). and all other tokens issued by Ethereum.
Yet, The possibility that a central bank would hand over all control of its money supply to a decentralized network seems extremely unlikely.
It is moreHumans’ natural desire to take the easiest route available could lead users to flock to the digital euro regardless of the privacy they give up in the processsays Fauvre-Willis.
“Unfortunately, when it comes to the introduction of the digital euro, I believe that ease will beat privacy.”says Fauvre-Willis.
“Data protection is an important characteristic, but it is not enough for people to change their behavior themselves. For those of us who truly believe in privacy, we must strive to make compelling and life-changing products at the same time, and in doing so we need to make sure that privacy is at the heart of everything we do. “he added.
The ECB is still examining the possibility of a digital euro The final decision is expected to be made in summer 2021.