Fabio Panetta, European Central Bank (ECB) board member, assures the digital euro will enhance existing cash options while tackling privacy concerns amidst the need for security in the evolving financial landscape.
In a recent gathering of the European Parliament’s Committee on Economic and Monetary Affairs, Fabio Panetta, a distinguished board member of the ECB, emphasized that the forthcoming digital euro is intended to augment and support cash payment options, not replace them.
However, he acknowledged that the digital incarnation of the currency might not deliver the same degree of privacy as its physical counterpart.
In his address, Panetta provided assurance to lawmakers that cash would continue to be a valid payment method within the Eurozone, with the digital euro merely offering an additional avenue for transactions. He further stated that the digital euro should emulate the risk-free, accessible, and straightforward nature of cash transactions.
While Panetta conceded that the digital euro may fall short in offering the same level of privacy as tangible currency, he expressed the ECB’s commitment to ensuring the greatest possible privacy.
He also revealed that the ECB is currently investigating the prospect of facilitating small, anonymous transactions via the digital euro, although the technology required for such offline payments remains in its nascent stage.
In addressing concerns regarding privacy, Panetta made it clear that the ECB neither possesses the intent nor the means to monitor each user of the digital euro. He confirmed that there would be no central storage of user information, making surveillance virtually unfeasible.
As European finance officials and lawmakers grapple with the delicate task of balancing privacy and security in the digital euro project, Eurozone finance ministers have declared privacy a “fundamental right.”
However, they also insist that the digital currency must conform to regulations that enforce sanctions and combat money laundering, illicit financing, and tax evasion.
The digital euro initiative is part of a broader effort by the European Union to modernize its financial regulatory landscape. Recently, the European Parliament approved an extensive set of regulations for cryptocurrency service providers, dubbed MiCA, further showcasing the EU’s commitment to adapting to the ever-evolving world of digital finance.