From e-commerce firms and payment processors to governments, everyone with half a server and an algorithm wants our data. So it’s a pleasant surprise to see at least one central bank expressly rejecting the idea of sweeping up personal information in designing its electronic cash.
The European Central Bank (ECB) “has no interest in monetising or even collecting users’ payment data,” executive board member Fabio Panetta told the European Parliament last week. A digital euro would let people “make payments without sharing their data with third parties, other than what is required by regulation.”
This restraint is refreshing in what’s developing into another area of superpower contention. Digital currencies are in the news less for what they’ll mean to users and more for how they would help issuers. Whether China could use a fully online version of taxpayer-backed cash to challenge the dollar’s hegemony gets the most attention. The electronic yuan, e-CNY, will be available for international visitors during next year’s Beijing Winter Olympics, People’s Bank of China Deputy Governor Li Bo said at the Boao Forum. We may know more about preparations for a FedCoin as early as July, when the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, which have been developing prototypes for a digital dollar, unveil their research.
The eurozone is still some years away from deciding whether to offer an electronic version of physical cash. If it does go ahead, the overriding goal may be less about joining the US-China race and more about taking back some of the data-mining power of private payment apps — and handing it back to citizens. That’s what people also want: 43% of the record 8,000-plus replies the ECB received in its recently concluded public consultation on the digital euro identified privacy as the most important feature. In societies where the state has already appointed itself Big Brother in exchange for supplying trust in economic transactions (and in human interactions, after Covid-19), individuals can do very little to reclaim ownership of their data.
Beijing may not want to surrender the surveillance capabilities of the digital yuan, whatever its unease with the dominance of private payment services in the domestic economy, such as Ant Group Co’s Alipay and Tencent Holdings Ltd’s WeChat Pay.
But Europe, which cares more than most of the world’s major economic powers about personal data protection, will be different.
Beyond checking money-laundering and terror financing, the ECB doesn’t want digital currencies to turn everyday lives into an open book for private payment giants to read and profit from. It’s investigating three different approaches to the privacy challenge.