Banking News

Privacy is top feature request in digital euro consultation

digital euro currency cbdc

Today the European Central Bank (ECB) announced the initial results of its Digital Euro public consultation, which started in October and ended yesterday. It received 8,221 responses from individuals and companies. Privacy was the number one requested feature (41%), followed by security (17%) and pan-European reach (10%). 

Privacy for central bank digital currency (CBDC) is not an entirely simple topic. While some may desire the same anonymity as cash, that’s unlikely. However, sharing data with the government for AML or tax surveillance and sharing your transactions with businesses are two different things. And based on a BIS report, the latter is also being considered by some other central banks.

The ECB plans to share detailed consultation results in the spring, and its CBDC paper published last year stated it would decide whether to formally create a central bank digital currency (CBDC) project by the middle of 2021. However, even if it takes that step, it will not yet involve a commitment to issue a digital euro. 

“The high number of responses to our survey shows the great interest of Europe’s citizens and firms in shaping the vision of a digital euro,” said Fabio Panetta, Member of the ECB’s Executive Board and Chair of the task force on a digital euro. The task force includes representatives from 19 European central banks.

Also today, in a Reuters Next talk, ECB President Lagarde said that she expects there will be a digital euro. Previously she said she had a hunch there would be one by 2025. At the same time, she called for global regulation of Bitcoin, which she believes is clearly a speculative asset, not a currency.

Today the ECB reiterated the four potential reasons for issuing a CBDC. These include the demand for electronic payment, a decline in cash usage, potential competition from a dominant private currency and European adoption of a CBDC issued by other central banks.

Previously Panetta highlighted areas currently being investigated by the task force. These include seeing whether the current TIPS settlement system can support hundreds of millions of custmers, and interoperability between centralized systems and distributed ledger technology (DLT) platforms. Its also exploring payment dedicated blockchains and hardware devices for offline CBDC transactions. That’s something that China is currently testing as well with its digital yuan.