Earlier this year, the European Commission (EC) made a significant stride by proposing a comprehensive legal framework set to usher in a central bank digital currency (CBDC) within the Eurozone’s 20 member states.
The European Central Bank (ECB) had previously outlined plans for the digital euro, which could potentially debut by 2027, offering consumers the ability to transact with “public money” seamlessly both online and offline.
In a most recent update, ECB president Christine Lagarde provided further insights into the bloc’s CBDC efforts, most notably the security and anonymity of the upcoming digital asset.
EU parliament members have CBDC privacy concerns
Earlier in the week, on September 25, Lagarde fiercely defended the ECB’s CBDC project, saying the currency “will not be completely anonymous as is the case with a banknote.”
Here’s the full quote:
“We are working to protect privacy, but since digital money leaves a trace on the blockchain, it will not be completely anonymous as is the case with a banknote.”– the ECB president said.
Lagarde’s remarks come after some members of the European Parliament (MEPs) voiced their concerns about the CBDC project, particularly its impact on user data privacy.
“Do you make a difference between anonymity and private life? How can we guarantee private life without guaranteeing anonymity?”– Gunnar Beck, German politician and MEP, asked Lagarde.
Commercial banks will have access to user data, but not ECB
In response, Lagarde said the ECB will not see how people spend their digital cash.
However, commercial banks will have access to data, Lagarde admitted, because the system will use them “as intermediaries to disseminate the digital euro.” These banks will analyze the data and share it with CBDC users, she added.
Offering the anonymity the banknotes provide is contrary to the objective of battling money laundering and terrorism financing. But nevertheless, the ECB will not have access to CBDC user data, and there will be no “ECB Big Brother” that will examine transaction details.