The ECB's plan to not save personal data on digital euros raises worries regarding AML/CFT safeguard
THE PROPOSED DIGITAL EURO will be free to use and open to everyone, but the European Central Bank (ECB) does not want to keep any personal data on its users, according to board member Fabio Panetta.
Panetta informed MEPs that the ECB aspires to have no access to personal data in order to address a significant concern regarding privacy and confidentiality.
However, given worries about money laundering, terrorism financing, and tax fraud, legislators are looking into ways to keep track of usage.
The ECB is developing a digital version of its currency and is in the midst of describing the larger design, seeking to allay fears that the digital money may disrupt the financial system and provide the central bank with too much information about individuals.
A digital currency, like cash, is a direct claim on the central bank's balance sheet, hence it is considered safer than a deposit held at a commercial bank.
"A digital euro would be a public good," Panetta told the European Parliament's Economic and Monetary Affairs Committee.
“It would therefore make sense for its basic services to be free of charge – for example when using the digital euro to pay another person, as is the case for cash.”
Banks have been afraid that a digital currency will render their own services obsolete, causing customers to quit them in favour of the enhanced security of central bank money.
However, Panetta stated that the ECB would not provide citizens with accounts and would not allow people to make scheduled, monthly payments to cover items such as bills or rent because it is not in the business of competing with private banks.
"We believe that supervised intermediaries who have direct contact with users are best positioned to identify use cases for conditional payments and other advanced payment services," Panetta added.
If the digital euro is issued, the ECB may establish its own separate payment app or allow commercial banks to integrate the digital euro into their own systems.
Its own app, on the other hand, would offer only basic payment functionality and would be used anywhere in the eurozone, a 20-nation currency bloc with about 350 million people.
“The ECB would not set any limitations on where, when or to whom people can pay with a digital euro,” Panetta said.
The bank is still researching the establishment of a digital euro, and real issuance will be years away.
By fLEXI tEAM