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Tackling Privacy Concerns Would Be Key to Ensuring Digital Euro Is Embraced by EU Citizens

It is possible that an electronic version of euro notes and coins may one day be widely available for use in Europe. But while the projected completion of that complex project is several years ahead, baby steps are being taken to make it a reality.

Starting next month, the investigation phase of a digital euro project, decided by the European Central Bank (ECB) Governing Council in July, will begin.

According to the bank’s announcement, the 24-month project phase, which is expected to run until October 2023, will focus on addressing key issues around design and distribution, ensuring that “in the digital age, citizens and firms continue to have access to the safest form of money, central bank money.”

Read more: ECB Begins ‘Investigation Phase’ of Digital Euro Project

A call for a proposal seeking high-level consultancy services for the digital euro project ended on Sept. 16, and will see professionals working on developing both a business model and a possible design and infrastructure for the digital currency.

See also: Euro’s Standing Could Improve With Digital Version, ECB Says

Earlier this month, European Central Bank President Christine Lagarde shared her thoughts on the virtual currency with Klaus Schwab, founder and executive chairman of the World Economic Forum.

Lagarde said that the ECB should have the technology for cryptocurrency readily available to ensure that the needs of customers who prefer to use digital currency instead of bank notes and cash are met.

“And we should respond to that demand and make sure that we have a solution that is European-based, that is secure, that is available under friendly terms, that can be used as a means of payment at reasonable terms … and does not jeopardize the whole banking system, which should be part and parcel of the proposal,” she told Schwab.

Privacy Remains a Top Concern

As the ECB pushes to create a digital version of the euro, the issue of privacy has emerged as the top concern for EU residents when it comes to digital currency.

Read more: European Central Bank Points to Privacy as Pivotal in eMoney Future

And this is not surprising, as Europeans – and their lawmakers – are very particular about protecting their data and information.

Big Tech firms, for example, have found themselves in hot water for breaching the EU’s General Data Protection Regulation (GDPR), considered one of the toughest data privacy laws in the world.

Earlier this month, Facebook’s instant messaging platform WhatsApp was fined a record €225 million euros (the equivalent of about $266 million and the second-largest GDPR fine ever) by the EU privacy watchdog, for not telling users how it shared data with Facebook.

The WhatsApp ruling came on the heels of Amazon’s record €746 million ($874 million) GDPR fine in July and Twitter’s €450,000 ($527,000) fine in December for withholding information about a data leak from regulators for 72 hours.

These sanctions are an indication of the deep attachment Europeans have to protecting personal information, and how important it is that any future digital currency would not violate their privacy by tracking users’ payments activities.

In July, PYMNTS reported that the European central banker charged with creating the central bank coin, Fabio Panetta, attempted to reassure stakeholders, saying that a digital version of the euro would ensure the privacy of consumers while protecting member states from the loss of monetary sovereignty amid the rise of cryptocurrencies and other digital currencies.

“If the central bank gets involved in digital payments, privacy is going to be better protected, because we are not like private companies. We have no commercial interest in storing, managing or monetizing the data of users,” said Panetta, who is a member of the ECB’s Executive Board.

You might also like: EU’s Exploration of Digital Euro Seen as Threat to Other Volatile Cryptocurrencies

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