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Digital euro ‘could leave consumers and businesses vulnerable to cyber attacks’

Many compliance professionals believe the planned digital euro is ‘already redundant’, according to the Compliance Institute

Digital Currency and Euro Symbol

The ECB started preparatory work on the digital currency in November 2023. Image: iStock

Colin Gleeson
Tue Mar 12 2024 - 00:01

More than seven out of 10 compliance experts in the Irish financial services sector are concerned that the planned digital euro could leave consumers and businesses vulnerable to cybercriminals and technical glitches, according to a new report.

A survey by the Compliance Institute, which polled 175 compliance professionals working primarily in Irish financial services organisations nationwide, also showed more than six in 10 compliance experts in the financial sector don’t believe there is a need for a digital euro.

The survey examined attitudes towards the digital euro, which has been described by the European Central Bank (ECB) “as an electronic form of cash for the digitalised world”.

The ECB started preparatory work on the digital currency in November 2023 with the earliest possible launch date recently mooted as 2026.

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Privacy fears around the currency also rank highly in the list of potential problems, with more than half concerned there could be issues around data protection and privacy if the digital euro is introduced.

However, about half of all respondents accepted the new digital currency may well bring benefits such as lowering the cost of banking and leading to greater convenience and efficiencies in transactions.

Michael Kavanagh, chief executive of the Compliance Institute, said just 6 per cent of respondents said they had no concerns about the digital euro. “It would seem that the ECB has much work to do to allay fears around it ahead of any launch,” he said.

“The thinking behind the digital euro is that it would give consumers the option to use central bank money in a digital format, complementing banknotes and coins.

“However, our survey found there are concerns that the roll-out of the currency could in time lead to less availability of cash.

“There are also clearly fears that consumers could be at a financial loss with this digital currency, particularly in relation to accessing their money in the event of a technical glitch, and potentially falling prey to fraudsters.

“Interestingly, almost half of those surveyed were worried that the digital euro could give more power to tech and fintech companies.”

Asked what they believed the main advantages of the digital euro to be, 20 per cent said they could see no benefits to its introduction.

Almost six in 10 believed it would lead to more efficient transactions, with a similar number stating the convenience of the digital euro would be one of its main advantages.

Half said it would reduce banking costs and be a cheaper way for consumers and businesses to pay for things and for people to exchange money.

Only one in four felt it would offer a safer alternative to cash and card, while 30 per cent said the digital euro would be less vulnerable than existing currencies to counterfeiting.

“The ECB has said that the digital euro would make people’s lives easier by providing a digital means of payment universally accepted throughout the euro area, for payments in shops, online or from person to person,” said Mr Kavanagh.

“However, with a ream of avenues already in place for electronic and digital payments, including contactless mobile phone payments and electronic bank payments, it is understandable that so many compliance professionals believe the digital euro is already redundant.

“This, combined with the extent of concerns around the digital euro, shows that the ECB has a job ahead of itself in convincing the Irish and wider European public that this is a safe, inclusive and easy-to-use currency.”

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter

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