ECB deploys ‘anonymous’ digital euro as public opposes ‘slave coins’

ECB released Another working document on the digital euro provides an extensive technical analysis of potential European CBDCs and their position in the existing financial system.

The work report, issued on May 13, aims to study issues such as financial intermediation, payment choices, and privacy in the digital economy, and provides many relevant algebra-based conclusions.

The study suggests that “anonymous CBDCs” are preferred over traditional digital payments such as bank deposits, but can be “replaced” by digital currencies or “payment tokens” issued by tech giants.

“These risks are particularly visible when these platforms compete with banks in the financial services market. However, the choice for data sharing capabilities could lead to widespread adoption of CBDCs,” the work report reads.

According to the ECB, one of the main problems with cash is that it cannot be used for more efficient online conversions while remaining anonymous. In contrast, bank deposits are available online but do not provide sufficient anonymity.

Finally, digital currencies issued by technology platforms “allow traders to hide from banks, but allow platforms to curb competition,” the ECB added.

The European Central Bank (ECB) continues to push ahead with the Central Bank Digital Currency (CBDC) project, even though Europeans don’t have much optimism about the digital euro.

CBDC, an independent digital payment method that allows agents to share payment data with any party of their choice, can overcome all friction. […] Introducing an anonymous CBDC allows merchants to prevent banks from extracting information from their payment flows.”

Although the ECB continues to promote a potential digital euro as an anonymity-supporting feature, Europeans are not very optimistic about CBDCs. According to public feedback from other Digital Euro Consultings, the majority of Europeans oppose the adoption of CBDCs in the European Union.

Consultation that started on April 5 collected There were 14,110 feedback entries at the time of writing, and many objected to the very idea of ​​a lack of user privacy related to central bank-controlled digital currencies. Some online critics refer to CBDCs as “slavecoins” and oppose the “digital slavery” that these financial instruments can introduce.

“Digital Euro in the sense of EU reference is not compliant with privacy or data protection regulations. […] We need a control system for microguarantors,” wrote Schmidl Andreas, an Austrian citizen.

“I am totally against the introduction of the digital euro because I do not want to depend on the internet to buy something. I strictly reject digital euros. Because it leads to total control and limits our fundamental rights and freedoms,” another anonymous user wrote.

As previously reported by Cointelegraph, the issue of user privacy has emerged as one of the biggest challenges associated with central bank digital currencies. This has quickly become a big problem for global regulators and governments as they need to prevent illicit financial activity while maintaining confidentiality.

According to the previous Digital Euro Disclosure Agreement published in April 2021, user privacy was regarded as the most important function of the Digital Euro by both citizens and experts in the European Union.

Relevant: Proposed Digital Euro Design Lacks Privacy Options, ECB Presentation Show

There are many other issues with the digital euro, including claims of lack of demand. Digital Euro Association president Jonas Gross told Cointelegraph in April that the digital euro’s main goals are not yet clear. Last year, Pablo Urbiola, head of regulation at Spanish bank BBVA, argued that it was not exactly clear what kind of customer needs the digital euro should meet.

According to European Commission Finance Director Mairead McGuinness, the ECB is still expecting a prototype CBDC at the end of 2023.

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