ECB release Another working paper on a digital euro provides an extensive technical analysis of a potential European CBDC and its place in the existing financial system.
Published on May 13, the working paper aims to study issues such as financial intermediation, payment choice and privacy in the digital economy, providing a number of relevant algebra-based conclusions.
The study suggests that an “anonymous CBDC” is preferable to traditional digital payments such as bank deposits, but it “may be replaced by digital currencies or “payment tokens” issued by tech giants.
“This risk will be particularly pronounced if these platforms compete with banks in the financial services market. However, the optionality of data-sharing capabilities could lead to widespread adoption of CBDCs,” the working paper reads.
According to the ECB, one of the main problems with cash is that it cannot be used for a more efficient online transition, while it remains anonymous. By contrast, bank deposits can be used online but do not provide sufficient anonymity.
Finally, the ECB wrote that digital currencies issued by tech platforms “allow merchants to evade banks, but enable platforms to stifle competition,” adding:
While Europeans are clearly less optimistic about a digital euro, the European Central Bank (ECB) continues to push its Central Bank Digital Currency (CBDC) project.
“A stand-alone digital payment instrument — CBDC — that allows agents to share their payment data with selected parties can overcome all frictions […] Introducing an anonymous CBDC enables merchants to prevent banks from extracting information from payment streams. “
While the ECB has been promoting a potential digital euro with anonymity capabilities, Europeans are less optimistic about any CBDC.Based on feedback from another member of the public Digital Euro Consultingmost Europeans oppose the adoption of CBDC in the EU.
The consultation was launched on April 5, accumulation At the time of writing, there were 14,110 feedback entries, many of which objected to the idea of a central bank-controlled digital currency and the associated lack of user privacy. Some online commentators have even referred to CBDCs as “slave coins,” arguing against the “digital slavery” such financial instruments could introduce.
Why not read public comments?
100% of citizens oppose CBDC. It’s a mass surveillance panopticon nightmare. Programmable expiration. Negative interest rates. Free killer.https://t.co/leJJ64UMn9
— Bitcoin Comfort (@BitcoinComfy) May 13, 2022
“A digital euro in the sense of the EU referral is not compatible with privacy protection or data protection regulations. […] Small surety needs a control system,” wrote Austrian citizen Schmidl Andreas.
“I am totally against the introduction of a digital euro because I don’t want to rely on the internet when buying things. I strictly reject the digital euro as it would lead to total control and limit our fundamental rights and freedoms,” wrote another anonymous user.
As previously reported by Cointelegraph, user privacy concerns have emerged as one of the biggest concerns associated with central bank digital currencies. This quickly became a big problem for regulators and governments around the world as they needed to protect confidentiality while preventing illicit financial activity.
According to a previous public consultation on the digital euro published in April 2021, users Privacy is considered the most important feature The digital euro is available to both EU citizens and professionals.
The digital euro has many other problems, including an alleged lack of demand. Jonas Gross, president of the Digital Euro Association, told Cointelegraph in April The main goal of the digital euro remains unclear. Last year, Pablo Urbiola, head of supervision at Spanish bank BBVA Arguing that it’s not entirely clear What customer needs should the digital euro meet.
According to European Commission finance chief Mairead McGuinness, ECB still looking forward to a prototype CBDC Sometime in late 2023.