The European Central Bank has been researching and possibly developing a digital euro for several years. A euro that, although public money issued by a central bank, would be entirely digital and could use centralized or decentralized registers. From October 12, 2020 to January 12, 2021, the ECB carried out a public consultation on the topic of the digital euro, as is customary to ensure transparency and citizen participation. There were several questions in the questionnaire for both professionals and individuals, which ultimately were more numerous to have participated. We were asked to rank certain potential features of the digital euro in order of importance, including availability, respect for privacy, ease of use, immediacy, security or even free access. The role of banks and other business units that could be affected by the issuance of this new form of currency was also questioned. In total, the respondents were asked two multiple-choice questions and 16 open-ended questions.
On April 14, 2021, the central bank released its report, reviewing the results of the consultation and its interest in the future decisions it has yet to make. Christine Lagarde spoke about the more than 8,000 responses from those surveyed at an online business conference last January. We have already learned that the confidentiality was the most frequently mentioned problem. In the second position is the security, also mentioned frequently by around 18% of the respondents. The Availability was also a requirement as citizens were visibly concerned that this European digital currency would not be equally available across the European Union. The report that Fabio Panetta presented to the European Parliament’s Committee on Economy and Money reviews these findings and adds perspective and light on their importance. However, these findings, which “will be an important contribution to the Governing Council” during the discussions on the digital euro, raise questions Representativeness and admission.
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The protection of privacy at the center of the topics
There is a big trend among the 8,221 respondents. A large part of the citizens, i. H. 43%, seem to expect the majority of a digital euro to respect their rights Private life. Probably borne by the fears of the Chinese scenario, which with its digital yuan represents an instrument for the massive surveillance and financial control of its population, the Europeans want to protect themselves from such a perspective. Will the digital euro be anonymous, a feature guaranteed by cash and public funds? The Eurosystem reiterates that it has no interest in collecting data related to user payments, tracking behavior or providing information to government agencies and other public institutions. Currently, the ECB declares that it wants to protect the following data: the identity of the user, the details of the payment (e.g. its amount) and the metadata associated with the transaction (e.g. the IP address of the device used) for the transaction).
Another type of protection that respondents to the consultation seem to want is that securityor the certainty of a tool that is insensitive to IT risks and accidents. 18% of the respondents set this feature as a priority. This is particularly the case for certain professional groups, particularly consumer associations and trade unions, followed by NGOs and the banking sector. Citizens on this issue also seem to support measures taken to combat illegal activities such as money laundering, terrorist financing or tax evasion.
On this point the ECB has ideas to meet the requirements of confidentiality and from security. A high level of confidentiality could also be supported by specific means that would not necessarily compromise security. For example, the identity of users could be separated from payment data, which would only allow financial intelligence services to obtain this information within a well-defined legal framework in order to identify the payer and the payee in the event of a suspected payment. Criminal activity.
In addition to these two main points, there are other, weaker priorities. user friendliness 11% of respondents indicated the lack of additional costs (9%) and offline use (8%) across the euro area. Almost half of the citizens surveyed mentioned the need to introduce detention restrictions, tiered allowances, or a combination of two or three options. Graduated remuneration is particularly popular in the research community, while credit institutions prefer holding limits.
An agenda that is still imprecise
Central banks around the world are considering releasing a digital version of their currencies, amplified by the surge in Cryptocurrency like bitcoin. The European Central Bank is not left out as it has been working on the issue since 2016. Choosing a much less offensive approach than China (which seems to be in a hurry to develop an instrument for diplomatic and financial competition against the dominant trade dollar), the EU wants to take its time. According to Christine Lagarde at a conference in January, the digital euro would be a reality within 5 years.
The Governing Council, the most important decision-making body of the ECB, to which Fabio Panetta and President Christine Lagarde belong, will examine in a few weeks whether it is advisable to officially initiate a phase of research and experiments on the introduction of the euro digitally. Therefore, if the majority of the Council members vote in favor, the ECB will move on to the next phase: developing services and possibly experimenting with a digital euro. This analysis phase can take up to 2 years. The whole process up to the formal acceptance may only end 2026 : The ECB prides itself on “wanting to take the time to do things right” to “only introduce a digital euro if it makes the financial system more efficient and we can avoid unnecessary risks”.
A failure of demographic representation
If we take into account the respondents’ countries of origin, Germany alone makes up almost half or 47% of all respondents. Italy and France follow the country very closely with 15% and 11% respectively of the participants. This is followed by sporadic participants between 5 and less than 1%. Here it is the problem of high diversity that characterizes the European Union, which manifests itself and is often erased from the interests of its historical members and economic leaders such as France or Germany. With its digital legislation and recovery plan, the continent in general is trying to unify its market and assert its autonomy over the American and Chinese giants. However, this market remains fragmented, especially when it comes to payment behavior.
The DESI index, which shows the level of the digital divide in Europe every year, highlighted the inequalities that persist across the continent in 2020. According to the index, inequalities vary widely between Member States and we can even identify a north-south border. Finland, Sweden and Denmark lead the way with 71/100, 69/100 and 68/100. On the other hand, Bulgaria, Greece and Romania appear at the bottom of the ranking with indices between 30 and 40. Another discovery: the digital divide is superimposing economic differences.
Additionally, in terms of the means of payment and potential preferences for intangible payments versus cash, credit cards are hardly the most widely used electronic payment method. The Covid-19 crisis, which accounts for around 52% of all transactions, has contributed to this digital fragmentation. As a Statista report shows, the latter has accelerated in countries that had already started with a head start. For example in Denmark, Norway, Great Britain or France, which already had great interest in digital innovation and development and where card payments were already very popular.
In Central Europe one can rather speak of a fragmentation of innovations with a slight increase in digital payments and card payments without reaching the level of the Baltic countries. This is the case in Romania, where cash has been heavily used in the past. There is no real penetration of credit cards in the country, but rather debit cards, the use of which has increased by a few percent as the risk was associated with cash. How can one hope to introduce a digital financial system on a continent that is still different in terms of the degree of preparation for maintaining the system? This is the risk that arises from the apparent disinterest of Central and Eastern European countries in the demographic distribution of respondents at the ECB consultation. “We have to create the decade that opens the digital decade of Europe”, as Ursula von der Leyen, President of the European Commission, argues, but without forgetting to include all members of the European Union.
Highlighting the gender gap in tech
Of course, a public consultation is neither a survey nor a poll and the European Central Bank is not responsible for the profiles that emerge from the sample of respondents. The institution defends itself well: “These biased data do not represent the population of the euro area”. These, however, reflect deeper digital problems and the key benefit of this consultation in the research and development process of the digital euro obliges us to take into account the representativeness of the results. Is that really the will of the European citizens? It is interesting to note, for example 87% of the respondents are men. Men in old age 35 to 54 years old constitute the age group and gender of citizens with the highest number of responses, ie 37%.
The digital sector already suffers from an impressive gender gap, both in terms of salary and the number of positions of responsibility assigned. It is no exaggeration to say that technology is a male dominated environment. In 2019, 7% of French startups were run by women. A problem that takes root in childhood when little girls begin to combine science and masculinity.
A consultation on the new form of currency that could shape our future would have deserved to include the voice of women not only in the name of a principle of equality, but also for very pragmatic reasons. Other sectors have shown the extent to which the absence of women in companies developing new technologies can harm society reinforce their exclusion from the digital revolution. For example, some research has shown that the VR experience causes women to get sicker than men who have developed and tested the technology extensively. This without mentioning the algorithmic biases from which artificial intelligence systems still suffer badly. Although the development of a digital currency requires different skills and technologies, a lack of consideration for the opinion of women could ultimately affect the design of a currency that is ultimately intended for all citizens of the country. European Union.