Preservation of Privacy in Digital Euro
Maarten Daman, a data protection officer at the European Central Bank (ECB), addressed concerns that the digital euro could be used for surveillance. In an interview with CoinTelegraph, he stated that the digital euro is being designed as the most private electronic payment option available to EU citizens.
The primary reason authorities seek personal data from payment transactions is to detect money laundering or fraudulent activities. However, Daman emphasized that the system is being developed with robust mechanisms to prevent direct identification of users and tracking of their payments.
“The Eurosystem would not be capable of directly identifying digital euro users, tracking their payments, nor legally allowed to do so,” Daman explained in his interview with CoinTelegraph. “As a public institution, we also lack any commercial incentive for such activities.”
Use of Pseudonymization
To enhance privacy, the digital euro infrastructure will integrate pseudonymization technology, which substitutes personal information with fictitious data. This technique enables institutions and authorities to analyze data for signs of criminal activity while ensuring individual anonymity.
The ECB is responsible for providing the digital euro’s infrastructure and ledger, while private companies will offer digital wallets for this Central Bank Digital Currency (CBDC).
Digital Euro and Innovation
Similarly, the Bank of England is advancing payment innovations by implementing technologies like tokenization, blockchain, and stablecoins to optimize its financial operations. Although the UK’s central bank did not announce a CBDC launch, it is still under consideration.
The ECB is moving forward with plans for the digital euro and aims to develop use cases by fall 2025. While enhanced privacy measures might alleviate some concerns, the digital euro may face challenges due to low consumer awareness.
A survey from Germany’s central bank revealed that nearly 60% of European citizens are unaware of the digital euro. Among those who are familiar with it, over 75% have significant concerns about its privacy protections.
