Transactions through the European Union’s (EU) prospective CBDC may be transparent to the intermediaries, as any other non-crypto digital transactions are.
Apart from the fears of government overreach that the EU’s ambitious digital euro project stirred, the primary worry of the public is the prospective currency’s privacy infrastructure. It seems that this concern might not be overblown after all. The latest European Central Bank’s (ECB) presentation shows that user anonymity is not a likely desirable design option.
On May 3, Patrick Hansen, crypto venture adviser and European digital asset regulation whistleblower, drew a lot of public attention to the European Central Bank’s presentation titled “Digital Euro Privacy options.”
This document is relatively short and has nine slides that highlight the possible options for user privacy in the European Union’s Central Bank Digital Currency (CBDC), also called the digital euro.
Acknowledging the public worry for the CBDC’s privacy, the presentation insists on the need to keenly assess the issue:
“In the context of other EU policy objectives, notably anti-money laundering and countering the financing of terrorism (AML/CFT).”
What this particular bureaucratic verbiage means practically is that the baseline privacy scenario for the digital euro project is all the executed transaction data is transparent to the intermediaries like banks. The option of offering a higher degree of privacy for the low-value transactions is seen to be on the table, however, and “could be investigated with co-legislators.”
Nevertheless, the general mood of the document can be expressed on one quote from slide four which reads:
“User anonymity is not a desirable feature.”
At that point, Hansen concludes, it is not yet clear how exactly the digital euro would differ from the current fiat-based network for digital payments.
The public feedback segment for the digital euro has over 13,000 replies by the time of publication, mainly critical to the CBDC project. In the meantime, the ECB and Eurosystem have started experimental prototyping of the customer interface of the digital euro by the end of April.