Digital Euro to be Issued Soon Without the European Central Bank Keeping Users' Personal Data

ECB board member Fabio Panetta. (photo: twitter @coindesk)

JAKARTA - The digital version of the euro currency will be free to use and available to all. But the European Central Bank does not want to store the personal data of its users. This was explained by a member of the ECB board, Fabio Panetta, on Monday, January 23.

The ECB is working on a digital version of its currency and is in the process of outlining a broader design, also hoping to allay concerns that digital currencies could disrupt the financial system and provide the central bank with too much data about citizens.

Digital currency is a direct claim on a central bank's balance sheet, like cash, so it is considered more secure than deposits held in commercial banks.

"The digital euro will become a public good," Panetta told the European Parliament's Committee on Economic and Monetary Affairs, quoted by Reuters.

"Therefore it makes sense that the basic service is free of charge - for example when using digital euros to pay others, just like cash," he said.

Banks worry that digital currencies will make their own services redundant, so customers will ignore them and move their cash to central bank money because of the added security.

However, Panetta said the ECB would not offer accounts to citizens and would not allow people to make routine programmed payments to cover transactions such as bills or rent, because it did not want to create competition for commercial banks.

"We believe supervised intermediaries, who deal directly with users, are the best place to identify use cases for conditional payments and other advanced payment services," Panetta said.

If issued, the ECB could develop standalone applications for payments or allow commercial banks to integrate the digital euro into their own platforms.

However, the app itself will only include basic payment functionality and ensures that it can be used anywhere in the euro area, the currency bloc of 20 countries with around 350 million people.

"The ECB will not place restrictions on where, when or to whom people can pay with digital euros," Panetta said.

Hoping to address key concerns about privacy and confidentiality, Panetta said the ECB aims not to have access to personal data.

However, this may be problematic, given concerns about money laundering, terrorism financing and tax evasion, leading legislators to explore options for policing their use.

The ECB is still investigating the creation of a digital euro and the actual issuance is years away.