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Privacy ranked the most important feature for future digital euro

Privacy ranked the most important feature for future digital euro

A public consultation by the European Central Bank found that citizens and professionals alike value privacy most for a possible future digital euro.

The ECB received a record of over 8000 responses to its consultation on the creation of a digital euro, with 43% of users citing privacy as the most valuable feature. This was followed by security (18%), the ability to pay across the euro area (11%), no additional costs (9%) and offline usability (8%).

More than two-thirds of respondents acknowledge the importance of intermediaries providing innovative services that allow access to a digital euro and indicate that it should be integrated into existing banking and payment systems. They would like additional services provided on top of basic digital euro payments.

Around a quarter of those polled take the view that a digital euro should make cross-border payments faster and cheaper. They want the digital euro to be usable outside the euro area, though with limits.

According to a quarter of respondents, end-user solutions comprising payment cards or a secure element in smartphones would be preferred to facilitate cash-like features. Almost half mention a need for holding limits, tiered remuneration, or a combination of the two, to manage the amount of digital euro in circulation.

“A digital euro can only be successful if it meets the needs of Europeans,” says ECB executive board member Fabio Panetta. “We will do our best to ensure that a digital euro meets the expectations of citizens highlighted in the public consultation.”

Plans to introduce a digital euro are still at a conceptual stage, with an announcement expected in June as to how best to proceed. But the project has been met with a backlash in Germany, spearheaded by the Deutsche Bundesbank, which has argued that successful tests of a six-year research effort to implement a distributed ledger for electronic securities settlement should negate the need for a central bank digital currency.

Popular German magazine Focus also wrote that a digital euro would be “catastrophic” for savers.

Comments: (3)

Rajan Chadha
Rajan Chadha - IBN - London 14 April, 2021, 10:58Be the first to give this comment the thumbs up 0 likes

My view ; Trust is fundamental and most important- rest are enablers

Jeremy Light
Jeremy Light - Fourdotzero - London 14 April, 2021, 12:58Be the first to give this comment the thumbs up 0 likes

CBDCs seem to be gaining a momentum that makes their widespread rollout around the globe over the next five years almost inevitable.

Also inevitable is that many CBDCs will be designed as surveillance and control systems, to keep track on spending, tax and monetary flows at an individual and organisation level, as well as control and incentivise where CBDC can be spent, and who can spend it.

Alarming as this is, I expect that CBDCs will be sidelined by DeFi and stablecoins, with innovation that goes far beyond that designed into individual CBDCs.

DeFi could even embrace CBDC, for example, programmable stablecoins that simply wrap, or tokenise CBDC as collateral, allowing the CBDC to be used through the medium of the stablecoin, but with features provided by the stablecoin such as privacy.

Andrew Smith
Andrew Smith - RTGS & ClearBank - London 14 April, 2021, 14:15Be the first to give this comment the thumbs up 0 likes

CBDCs are gaining momentum, but they have so many fundamental issues that remain un-answered. Recent use cases have even illustrated that there is no requirement for CBDCs to achieve the experiences we want across financial services. 

One of the un-answered aspects is that of privacy and it requires us to understand what could be used to identify us going forward. CBDCs could be very much against the principles of legislation such as GDPR. So yes, privacy is key and unfortunately until CBDCs answer that (the same applies to DeFi and stablecoins) we shouldnt expect to see mass rollout or adoption anytime soon....