The European Central Bank (ECB) continues promoting the use of its central bank digital currency (CBDC) project in spite of Europeans opposing a digital euro.
The ECB issued a working paper about the digital euro, explaining an extremely technical analysis of a potential European CBDC and its role in the current financial system.
The working paper was Issued on May 13 and it focuses on studying issues like payment choices, financial intermediation and privacy in the digital economy, giving a big number of related algebra-based conclusions.
The study has suggested that a “CBDC with anonymity” is more acceptable to traditional digital payments such as bank deposits but it “may become supplanted” by digital currencies or “payment tokens” created by technology giants.
The ECB previously hinted at the idea of a CBDC and Europeans were not supportive yet the ECB is promoting it constantly. Even the European Commission of Finance has launched a consultation on the idea of digital euro, where people can submit their thoughts on it by answering a questionnaire.
People can take advantage of this consultation till 14th June, 2022.
“This risk would be particularly tangible if those platforms compete with banks in the market for financial services. However, an optionality for data sharing features may result in a widespread CBDC adoption,” the working paper shows.
Also Read: European Union Nods to Privacy-Busting Crypto Rules
ECB says that one of the chief issues of cash is that it cannot be used for more well managed online transitions while it still remains anonymous. In comparison, bank deposits can be operated online but do not give ample anonymity.
Lastly, ECB wrote that “An independent digital payment instrument — a CBDC — that allows agents to share their payment data with selected parties can overcome all frictions. The introduction of a CBDC with anonymity enables merchants to prevent banks from extracting information from payment flows.”
