User anonymity not desirable for Digital Euro: European Central Bank

The

European Central Bank

(ECB) published a new report focussing on the privacy of users regarding the future usage of the

digital euro

, Bitcoin.com reported. The ECB stressed that the privacy will be assessed from the context of other EU policies like anti-money laundering (AML) and counter-financing of terrorism (CFT) laws. The bank disapproved of user anonymity for digital euros, as it will make it impossible to control the amount in circulation and prevent money laundering.

Patrick Hansen

, a crypto venture advisor, tweeted on May 3 about various privacy options of digital euro explored and published in the presentation by ECB:

The 3 levels of privacy highlighted in the report are:

• Baseline

  privacy : A digital euro would provide people with a level of privacy equal to that of private digital solutions.
• This level would ensure that personal and transaction data of the users is transparent to intermediaries which need to comply with AML and CFT regulations.
• Privacy for low-value payments (selective): The second approach would allow a higher degree of privacy for low-value payments.
• Privacy under the offline functionality: This will ensure privacy for offline transfers, where low-value balances and transaction amounts would not be known to financial intermediaries or central banks.
• The preliminary views of the presentation emphasised the following points:

• The user anonymity was called an undesirable feature.
• The

  Eurosystem

  should only be able to see the minimum transaction data required to validate digital euro payments, even if it decides to perform the settlement function.
• Aggregate data on the use of the digital euro should be available to the Eurosystem under any privacy options for statistical, research, supervisory and oversight purposes, including to fight illicit activities.

• The policy considerations have been framed in the presentation:
• Enabling high privacy standards if it's politically viable and desired.
• A need for greater privacy than the existing payment solutions for integrating in the regulatory framework is emphasized.
• Seeking a desired balance between a high standard of privacy in the use of digital euro and other EU policy objectives.

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