BRUSSELS ― When the European Commission unveiled draft legislation paving the way for a digital version of the euro, its jitters over how to allay privacy concerns were only too apparent.
“This is not a Big Brother project,” Finance Commissioner Mairead McGuinness told reporters on Wednesday after presenting what, if it becomes a reality, will be a virtual extension of euro banknotes and coins and which will settle payments across the eurozone in seconds.
Supporters say the digital euro goes beyond providing a public good and will ensure the currency and European Central Bank remain relevant in a digital economy, where cryptocurrencies circulate and big tech companies dream of printing their own money.
But critics fear it will give governments a way to snoop on buying behavior. At the extreme end, conspiracy theorists portray the digital euro as a covert plan to phase out cash and monitor people’s shopping habits.
Unease about how to sell the project was underscored by a last-minute attempt by Commission President Ursula von der Leyen’s team to delay the proposal until after the summer over concerns that language on payment privacy wasn’t sufficiently strong. It got back on track only after an intervention from McGuiness and Executive Vice President Valdis Dombrovskis ― together with the introduction of bolstered language on privacy safeguards.
Tough sell
“We know this is a key concern for citizens,” said McGuinness, outlining that the ECB would have no access to people’s identities during transactions.
So determined were the EU’s executive arm and ECB to get the privacy message out, they distributed opinion articles in 17 newspapers across the bloc, talking up the digital euro’s benefits and what safeguards will be put in place.
Nonetheless, it remains a tough sell to ordinary people even to explain what it is.
A digital currency, just like cash, allows people to pay for things instantly through a virtual wallet on a smartphone without the need for a bank account. It’s backed by a central bank so doesn’t have the same risks attached to it as cryptocurrencies.
“Describing a digital euro isn’t easy,” McGuinness said, pulling out a wad of old-fashioned banknotes. “It’s easier to talk about cash because it’s tangible.”
There’s criticism from industry too. Bankers dislike the idea of offering people access to digital euros for free and fear savers might prefer to hold them rather than pay to put money in accounts.
The retail sector doesn’t want to pay banks a fee to process digital euro payments.
The Commission is confident its bill addresses these concerns by limiting how many digital euros people can hold, and has pledged to cap shopkeepers’ fees.
But industry criticism has a habit of creeping into the European Parliament, which will soon begin its scrutiny of the proposal. Right-wing MEPs have already lambasted the project for turning EU society into the Soviet Union. The Parliament and EU Council, representing national governments, will have to agree on the final shape of the legislation.
