Speaking to the Financial Times on Sunday, June 20, Fabio Panetta, an executive board member at the European Central Bank, admitted that having a Digital Euro is a must for the European Union to combat the “threats” from other cryptocurrencies.
Panetta’s comments come just at a time when the global acceptance of cryptocurrencies is on the rise. Apart from public cryptocurrencies, several private players have started dabbling into the digital currency market and precisely it is getting the central banks nervous.
Panetta said that apart from guiding consumer privacy, a Digital Euro will help in protecting the region’s monetary sovereignty from other competing cryptocurrencies. The ECB executive noted:
“If the central bank gets involved in digital payments, privacy is going to be better protected . . . because we are not like private companies,” he said. “We have no commercial interest in storing, managing or monetising the data of users.
Of course there is the potential threat that could come from others issuing a digital means of payment . . . If people do want to pay digitally and we do not offer them a digital means of payment, somebody [else] would do that.”
Facebook’s Diem Is “Unstable”
In taking a shot at some private cryptocurrencies, Panetta referred to Facebook’s Diem as “unstable” and said that people’s major concern with private cryptocurrencies is that they would erode their privacy. Panetta said that the Digital Euro protects its customers from such privacy intrusion.
He noted that the ECB has found ways to separate people’s payment details from their identities. “The payment will go through, but nobody in the payment chain would have access to all the information,” he said.
The executive also shared some progress the European Central Bank has achieved with respect to testing offline payments of Digital Euro with Bluetooth-linked devices. He noted that ECB has tested “offline payments for small amounts, in which no data is recorded outside the wallets of payer and payee”. A small amount like 70-100 EUR can be transferred offline.
ECB President Christine Lagarde has been stressing the need for having a Digital Euro to combat the growing clout of digital currencies. She said that the complete rollout of Digital Euro will happen in the next 5 years.