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According to a former Apple executive, the European Central Bank could be paying lip service to the idea of privacy in relation to a digital euro.
In an April speech to the European Union Committee on Economic and Monetary Affairs, European Central Bank board member Fabio Panetta stressed the role of privacy in any proposed future CBDC rollout.
The ECB had conducted a public consultation on the possibility of a digital euro, canvassing the opinions of over 8,000 individuals and businesses. The responses that came back suggested privacy was the number one concern surrounding the issuance of a central bank digital currency.
With 43 percent of respondents citing privacy as a key criterion, Panetta announced that the digital euro should meet certain expectations without compromising stability.
Other survey respondents centred on the need for a digital euro to provide stable transfers (18%), while others focused on cross-border payments within the European Union (11 percent ). Some respondents (9%) emphasised the importance of low fees and the opportunity to access the system even though it is offline (8 percent ).
“As I have already mentioned, privacy emerges as the most important feature 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 privacy enhancing techniques since even before the concept of a digital euro emerged. Preliminary research suggested that a digital system could still be monitored for illicit activity, while still allowing for transparency and privacy.However, while the ECB seems to be making all the right noises about a possible CBDC rollout, not everybody is convinced that the end result will be too positive.
Former product manager at Apple, and now chief operating fficer of Oasis Labs, Anne Fauvre-Willis, said the EU had proven amenable to the concept of consumer privacy in the past. But that won’t count for much if the digital euro is issued on a centralized system.
“The EU has had a good track record around consumer privacy but it’s still a centralized system,” Fauvre-Willis told Cointelegraph, adding, “Instead of enabling this via a centralized bank, why not empower a decentralized protocol to do this instead?
If a digital euro were to be distributed on the Ethereum network, it would have the same degree of decentralisation and control as Ether (ETH) as any other token issued on the Ethereum blockchain.
However, it is highly unlikely that a central bank will hand over complete ownership of the money supply to a decentralised network.
Furthermore, the innate instinct of humans to take the shortest route possible can lead to users flocking to the digital euro, regardless of how much privacy they give up in the process, according to Fauvre-Willis.
“In regards to people adopting the digital euro, unfortunately I think ease will win over privacy alone,” said Fauvre-Willis.
“Privacy is a feature but it’s not enough to drive people on its own to change their behavior. Instead for those of us who really believe in privacy we have to simultaneously strive to make compelling and life changing products and as we do we need to put privacy at the center of what we make,” she added.
The ECB is also investigating the feasibility of a digital euro, with a definitive decision due by summer 2021.