More than seven in ten (73pc) 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. While more than six in ten (63pc) compliance experts in the financial sector don’t believe there is a need for a digital euro.
This is according to the findings of a new survey by the Compliance Institute, which polled 175 compliance professionals working primarily in Irish financial services organisations nationwide. 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[1].
Privacy fears around the currency also rank highly in the list of potential cons, with more than half (51pc) concerned that there could be issues around data protection and privacy if the digital euro is introduced. However, approximately half of all respondents accepted that the new digi currency may well bring benefits such as lowering the cost of banking and leading to greater convenience and efficiencies in transactions.
Commenting on the survey findings, Michael Kavanagh, CEO of the Compliance Institute said:
“Just 6pc of respondents said they have no concerns about the digital euro – which mean that the remaining 94pc feel some level of unease about the planned new currency. It would seem that the ECB has much work to do to allay fears around it ahead of any launch.”
The Top Five concerns which compliance professionals have about the digital euro, according to the survey, are:
- Consumers would be at the mercy of technology and could be unable to access their money in the event of a glitch (73pc expressed this worry)
- Its digital nature makes it susceptible to hackers, fraudsters and cyberattacks (73pc)
- The potential for consumer confusion, with a likely lack of knowledge on how to use the digital currency (65pc)
- It could lead to issues around data protection and privacy (51pc)
- It could displace and lead to less availability of cash (50pc)
Mr Kavanagh added:
“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 that there are concerns that the rollout 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 (47pc) of those surveyed were worried that the digital euro could give more power to tech and fintech companies.”
Asked in the survey what they believed the main advantages of the digital euro to be:
- One in five (20pc) can see no benefits to its introduction
- Almost six in ten (59pc) believed it would lead to more efficient transactions, with a similar number (56p) stating the convenience of the digital euro would be one of its main advantages.
- Half believe it will 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 (24pc) felt it would offer a safer alternative to cash and card
- Less than one in three (30pc) said the digital euro would be less vulnerable than existing currencies to counterfeiting.
Mr Kavanagh added:
“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. 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.”
[1] See Interview with Christine Lagarde, President of the ECB, on 8 May 2023. Fabio Panetta, Member of the Executive Board of the ECB, also estimated a launch date of 2026. Header image credit