Despite the fact that the new digital euro would provide better privacy for smaller transactions, officials from the currency union acknowledged at a meeting of finance ministers on Monday that it will not provide complete anonymity.
Although no formal decision has yet been made on whether to issue the central bank digital currency (CBDC), the EU is already considering how to link payment innovations to anti-money laundering regulations, both for the digital euro and private cryptocurrencies such as bitcoin, which are currently under consideration.
The Statement of Ireland’s Finance Minister
Paschal Donohoe, Ireland’s finance minister, told reporters that ministers have agreed that any new structure for the euro should “accommodate privacy concerns,” but that new restrictions would also be in place to “counteract the use of digital euros for inappropriate objectives.”
“A risk-based approach may be used, allowing for more privacy for less hazardous and smaller transactions and vice versa,” said Donohoe, who serves as the head of the Eurogroup, a group of ministers that meet on a regular basis.
He argued that offline payments for low-value payments made between people who are physically close to one another, such as in stores and between friends, would assist those who have been cut off from the financial system. He was referring to recent proposals made by Fabio Panetta, the president of the European Central Bank.
It is expected that the European Commission will soon publish a consultation on any legislation that may be required to support the new digital euro, but it has been warned that an overly centralized system could serve as a “honeypot” of information for spies and result in troubling mass surveillance.
A Digital Euro with complete anonymity is not wanted
“A digital euro that is entirely anonymous is not desired,” Paolo Gentiloni, the European Commission’s chief economist, told reporters.
After much debate, the European Parliament last week decided on contentious new anti-money laundering laws that will force anybody participating in even small-value transfers of cryptocurrencies such as bitcoin to be identified and sanctioned. Many in the business have voiced fear that the restrictions would infringe on their privacy and hamper innovation, and the European Commission shared their concerns.