The European Commission is set to propose a draft law on June 28, banning interest payments or surcharges on the use of a digital euro, according to a document viewed by CoinDesk. The anticipated central bank digital currency (CBDC) would be required to facilitate cash-like offline payments immediately upon its issuance. Furthermore, users should not be able to program the digital currency to limit its onward use.
With the introduction of the digital euro, the European Commission aims to ensure that it is readily available for both online and offline payment transactions. The privacy level for offline, face-to-face transactions is expected to be comparable to the experience of withdrawing banknotes from an ATM. Moreover, neither the European Central Bank (ECB) nor payment service providers would have access to personal transaction data for offline transactions.
However, there are certain caveats. Banks that distribute the digital euro can provide financial crime authorities with account funding details if they suspect money laundering activities.
Privacy has emerged as a significant concern amongst the public when it comes to the implementation of CBDCs. A 2021 ECB survey revealed privacy as the number one public concern, with many individuals fearing state surveillance on a large scale, drawing parallels with China’s previous actions.
On the one hand, the European Commission’s proposal to ban interest payments and surcharges on the use of a digital euro, as well as ensuring privacy for offline transactions, addresses some of the public’s primary concerns. This could lead to a more widespread acceptance of the digital euro as a secure and reliable form of currency, promoting its mainstream use for various transactions.
On the other hand, the possibility of banks sharing account funding information with financial crime authorities may still raise concerns among users who value their privacy. While this provision is aimed at preventing money laundering and other illegal activities, it could also potentially lead to increased scrutiny and mistrust of the digital euro.
In conclusion, the European Commission’s draft law presents a potential way forward in addressing public concerns about privacy and surveillance related to the digital euro. It remains to be seen whether these measures will be sufficient to garner widespread acceptance and use of this CBDC. As the world moves towards a more digitized financial system, it becomes increasingly important to strike a balance between privacy, security, and the need for effective regulation.
Source: Coindesk
