Another working paper by the ECB on digital euro is dropped, causing further outrage among Europeans opposed to a central bank digital currency.
Another working paper was released by the ECB on the digital euro. It provides a detailed technical analysis of a possible European CBDC as well as its place in the existing financial system.
The May 13th working paper was published. It aims to examine issues such as financial intermediation and payment options, privacy in the digital economy, and provides a lot of algebra-based conclusions.
According to the study, a “CBDC without anonymity” is better than traditional digital payments such as bank deposits. However, it could be “supplanted” or replaced by digital currencies or “payment coins” issued by tech giants.
“This risk is especially evident if these platforms compete with banks on the financial services market.” The working paper states that an option for data sharing may lead to widespread CBDC adoption.
According to the ECB one of the biggest problems with cash is its inability to be used online for faster transitions, while still maintaining anonymity. Bank deposits, however, can only be used online and do not offer enough anonymity.
The ECB added that digital currencies issued by technology platforms “allow merchants hide from banks, but enable platforms to stifle innovation.”
Despite Europeans not being too positive about a digital currency, the European Central Bank (ECB), continues to push its central bank digital currencies (CBDC).
“An independent digital payment tool — a CBDC — allows agents to share payment data with selected parties […]. The introduction of a CBDC without anonymity allows merchants to stop banks extracting payment flow information.”
The ECB continues to promote a digital euro with anonymity-enabled functions, but the Europeans aren’t optimistic about any CBDC. A second digital Euro consultation revealed that the majority of Europeans oppose the adoption of a CBDC within the European Union.
The consultation was launched on April 5th. It has collected 14,110 feedback submissions at the time. Many are opposed to the idea of a centrally controlled digital currency and the associated lack of privacy. Online commentators have even called a CBDC a “slavecoin”, referring to the possibility of financial instruments introducing digital slavery.
“The digital euro, in the EU sense, is not compatible with the protection of privacy and data protection regulations. […] It is necessary to have a control system for small guarantors,” Schmidl Andreas, an Austrian citizen wrote.
“I am against the introduction digital euros because I don’t want to be dependent upon the internet when I purchase something. Another anonymous user said that the digital euro was a complete rejection because it restricts our fundamental freedoms and leads to total control.
Cointelegraph reported that the privacy of users is one of the most pressing issues associated with digital currencies issued by central banks. Global regulators and governments quickly realized this was a problem. They need to protect confidentiality while preventing illicit financial activity.
A previous digital euro public consultation was released in April 2021. It revealed that user privacy was deemed the most important feature in a digital euro. This was a consensus among both citizens and professionals within the European Union.
A digital euro has many other problems, such as the lack of demand. Jonas Gross (chairman of the Digital Euro Association) told Cointelegraph that the primary goal of the digital currency is still unclear. Pablo Urbiola, Spanish bank BBVA regulatory executive, argued last year that it wasn’t clear what kind customer demand the digital currency was supposed to fulfill.
Mairead McGuinness (ECB finance chief) said that the ECB still anticipates a prototype CBDC in late-2023.
