The digital euro will protect consumer privacy, the ECB’s biggest promises

The introduction of a digital euro will enhance consumer privacy and protect the eurozone from “risk” against cryptocurrencies that could undermine the bloc’s control, according to the central bank overseeing its development.

Fabio Panetta, a member of the European Central Bank’s executive committee, told the Financial Times that one of the main objectives of the project was to curb the spread of digital currency by countries and other companies.

“If the central bank is involved in digital finance, confidentiality will be better protected… Because we are not like ordinary companies,” he said. “We have no interest in selling, directing, or harassing, consumers.”

“Obviously there is a risk that it could come from some providers of digital payment methods… If people want to pay by numbers and we don’t give them a digital payment method, someone [else] would do that. ”

He distinguished the digital euro – the electronic currency provided by the central bank – into “unstable currencies” such as Diem, Facebook’s fixed digital currency which would allow users to send money easily as a text message.

Recent ECB asking on digital the euro found that the main concern of the people is that it would disrupting their privacy. But Panetta said the central bank had experimented with ways to separate people’s signatures from what they were paying. “The payments will pass, but no one will receive everything they can get,” he said.

The central bank also tested “small offline payments, in which no data is recorded outside the wallets of suppliers and providers”, he said; Transfers up to € 70 or € 100 can be done using the Bluetooth link between devices.

“At the very least, we can allow for anonymous payments, but in most cases, privacy and confidentiality are different from anonymity,” Panetta said, adding that additional checks may be needed on most transactions to avoid wasting money, money laundering or tax evasion.

“Payments can be rescheduled [after the event] if the police want to check if something is wrong, ”he said.

About two-thirds of the world’s banks are trying to launch digital currencies, according to National Bank.

But commercial banks are concerned about it central bank digital currency it can waste their money, especially in crisis. Morgan Stanley estimates that € 837bn, or 8 percent of eurozone banks, could be exchanged for digital euros.

It could also cost money, some researchers have said; More than half of German households surveyed recently by the Bundesbank also expressed doubts about the digital euro and frequent investors were highly skeptical.

Panetta said the digital euro could lead to “significant changes in the way money, money and the general public work”, for example by “modification” to allow only payments, such as street payments or video.

But he said the ECB was determined to ensure that the digital euro did not disrupt commercial banks, instead of money, undermine technology or be a shadow in small countries.

To that end, it plans to take a cap that can be saved at € 3,000 each or force a “payback” on top of it, Panetta said.

The ECB will meet next month to make a decision push forward in preparation and Panetta said it could be ready for use in about five years.

The central bank will also complete the task of overseeing digital privacy funds and lenders by the end of this year, he said.

Crypto currencies such as bitcoin are “the most dangerous animals” that are “widely used in violent activities” and destroy “too much power”, Panetta warned.

The so-called solidcoins like Diem should be safe because they are backed by fiat money, but Panetta said the potential instability “caused the currency to malfunction – and for that reason it is still unstable”.

Managing and managing crypto assets is difficult “because there is no regulatory body,” he said. “It’s traditional. They can live in China. They can live in Switzerland or South America….

Euro digital should be less expensive for tourists traveling to Europe, says Panetta, but the ECB “should carefully consider outreach, to its limits, for foreign consumers”.

Central banks are in the process of negotiating to ensure that their digital currency is kept “interdependent,” Panetta said, as this will help “limit payments and lower prices”.