The European central banker in charge of the creation of a digital version of the euro said such a currency would both protect the privacy of consumers and shield member states in the monetary union from the loss of monetary sovereignty that comes with growing use of cryptocurrencies or digital currencies created by governments, Financial Times reported.
“If the central bank gets involved in digital payments, privacy is going to be better protected because we are not like private companies. We have no commercial interest in storing, managing or monetizing the data of users,” Financial Times quoted Fabio Panetta as having said.
Privacy was the chief issue that emerged from gauging public interest in European Central Bank digital currency, but developers of a potential ECB digital currency have tested ways to separate the identity of participants in a transaction, Panetta is quoted as having said. “The payment will go through, but nobody in the payment chain would have access to all the information.”
Also on the privacy front, the bank has tested “offline payments for small amounts, in which no data is recorded outside the wallets of payer and payee,” he reportedly said, suggesting the cap on such payments could be 70 or 100 euros.
“For very small amounts, we could permit really anonymous payments, but in general, confidentiality and privacy are different from anonymity,” Panetta reportedly said, adding that certain transactions would need to be subject to official scrutiny after the fact.
In the case of suspected “money laundering, terrorism finance or tax evasion,” he reportedly said, “a payment can be reconstructed if the police want to assess whether there’s been any illicit activity.”
Addressing a key political issue around digital currencies, Panetta reportedly said there are risks to EU countries if the union doesn’t issue its own digital currency: “Of course there is the potential threat that could come from others issuing a digital means of payment. If people do want to pay digitally and we do not offer them a digital means of payment, somebody (else) would do that.”
According to Financial Times, citing data from the Bank for International Settlements, nearly two-thirds of the world’s central banks are exploring the creation of digital currencies to the cash they traditionally handle.