The European Central Bank addressed concerns that its planned central bank digital currency, the digital euro, could be used to surveil EU citizens.
In a recent interview with CoinTelegraph, Maarten Daman, a data protection officer at the ECB, said the digital euro is being built to be the most private electronic payment option available to European consumers.
One primary reason authorities might seek personal data from payment transactions is to identify money laundering or fraudulent activity. However, Daman insisted that the system is being designed with strong mechanisms to ensure users can’t be traced.
“The Eurosystem would not be technically able to directly identify digital euro users, track their payments, nor legally allowed to do so, nor would we have a commercial incentive as a public institution,” Daman told CoinTelegraph.
Pseudonymization Technology
To protect consumers, the digital euro’s infrastructure will incorporate pseudonymization technology, which replaces personal information with fictitious data. This tech gives institutions and authorities the ability to analyze data for signs of criminal activity while keeping individuals anonymous.
In this model, the ECB would provide the digital euro’s infrastructure and ledger, while private companies would offer digital wallets for the CBDC.
Increasing Awareness
The push for payments innovation was echoed in a recent release from the Bank of England, where the UK’s central bank announced plans to implement technologies like tokenization, blockchain, and stablecoins to optimize its financial operations. However, the UK’s central bank stopped short of announcing its own CBDC launch, though it is still under consideration.
The ECB is forging ahead with its plans for the digital euro and expects to develop use cases for the CBDC by the fall of 2025. While stricter privacy controls might allay some doubters, the digital euro could struggle to gain traction simply due to a lack of consumer awareness.
ALthough the CBDC was announced in 2020, a survey from Deutsche Bundersbank, Germany’s central bank, found that almost 60% of European citizens are unaware of it. Among those who are familiar with the digital euro, over 75% expressed significant concerns about its privacy measures.
