The European Central Bank has said it does not maintain a high level of privacy for the digital euro. One of the priorities of the regulator is to increase the transparency of the digital euro.
According to a presentation published by the European Central Bank (ECB), it is important for future users of the digital euro to have control over their personal data and be sure that it is kept private. However, the regulator notes that the transition to digital payments by default means a decrease in the level of data privacy. The priority for the ECB is to ensure the transparency of transactions with the digital euro, since the anonymity of users will not allow control over the funds in circulation. As a result, the regulator’s efforts to combat money laundering (AML) and terrorist financing will be ineffective.
The presentation stated that the ECB and other central banks from the European Union should have access to transaction data using the digital euro to verify payments. These hidden summaries should be available for statistical analysis, as well as for countering fraud and crime. ECB researchers have presented several levels of privacy for the digital euro. The base level provides verification of customers during registration, and their personal data and transaction data will be available to intermediaries to ensure compliance with AML rules.
Payments with small amounts (transactions with a low level of risk) imply a higher degree of confidentiality. This includes simplified checks, including the creation of a special wallet with less stringent registration requirements. Larger digital euro transactions will be subject to standard controls. The digital euro also provides for offline transactions, the data on which will not be available to intermediaries or the central bank. However, to prevent the risks of illegal activity, offline digital euro payments will only remain private for contactless payments at close range.
In March, the ECB said that for the successful implementation of the digital euro, it must be accepted by any outlets in the eurozone. Last year, ECB executive committee member Fabio Panetta said the central bank’s digital currency should be used as a vehicle for payments, not savings, so as not to hurt commercial banks.
