ECB Declares That It Will Let EU Legislators Decide On Digital Euro Privacy Issues

Key Points:

• The amount of private information the European Central Bank (ECB) will have access to if it adopts a digital euro will be decided by lawmakers, not the bank itself.
• The digital euro will likely rely on intermediaries like private banks to hold digital euro accounts for users. Those intermediaries would “not have more access than they have already now,” Panetta added.
• The central bank will decide in October whether to proceed with a realization phase, during which it will create and evaluate technological options and commercial plans for the CBDC.

The amount of private information the European Central Bank (ECB) will have access to if it adopts a digital euro will be decided by lawmakers, not the bank itself.

However, one of the ECB’s board members told MEPs that the organization’s top executives aren’t begging for access to details about specific transactions.

“We propose that we do not have access to any personal data,” executive board member Fabio Panetta told the EU Parliament’s economic committee on Monday in a regular dialogue on the digital euro. 

“It will be for you as co-legislators to decide on the balance between privacy and other important public policy objectives,” he added, naming anti-money laundering, counter-terrorism financing, preventing tax evasion and ensuring sanctions compliance.

The digital euro will likely rely on intermediaries like private banks to hold digital euro accounts for users. Those intermediaries would “not have more access than they have already now,” Panetta added.

Lawmakers can also expect to decide whether the digital euro could be used as legal tender and whether intermediaries would be required to distribute it. Panetta noted that the digital euro “would never be programmable money” that would put constraints on users. “Central banks issue money, not vouchers,” he said.

According to Panetta, the leadership of the central bank is concerned that blockchain technology may not be effective for supporting a size of 400 million people, thus it may decide against using it as the underlying technology.

The investigation phase on the digital euro by the ECB is halfway complete

The central bank will decide in October whether to proceed with a realization phase, during which it will create and evaluate technological options and commercial plans for the CBDC. However, whether the digital euro will actually exist will be up to European institutions.

In the second quarter of 2023, the European Commission is anticipated to release a proposal about the digital euro. As a result, the legislative process will begin since the European Parliament and Council must agree on a strategy for the digital euro.

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