- European Central Bank has continued to develop its central bank digital currency, the digital euro, focusing on privacy as a significant aspect.
- Executive board member Fabio Panetta stated that the central bank has no commercial interest in storing or monetizing users’ data.
- The launch of the digital euro aims to protect users against private stablecoins and other cryptocurrencies.
European Central Bank (ECB) executive Fabio Panetta believes that the digital euro will help to protect consumer privacy and that cryptocurrencies such as Bitcoin are “very dangerous animals.”
Digital euro to focus on protecting privacy
Fabio Panetta, an executive board member at the European Central Bank, stated that the digital euro would protect the eurozone from the “threat” of other cryptocurrencies that would undermine the block’s monetary sovereignty.
He added that the aim of the digital currency project from the central bank was to combat the spread of other digital assets created by other countries and companies. He said:
“If the central bank gets involved in digital payments, privacy is going to be better protected because we are not like private companies. We have no commercial interest in storing, managing or monetizing the data of users.”
Pointing to stablecoin Diem, created by Facebook that would allow users to send money as quickly as text messages, Panetta believes that it could be a potential threat if the central bank does not offer users a digital means of payment.
The European Central Bank’s recent consultation on the digital euro concluded that the main concern around the digital currency was that it would erode their privacy. Panetta explained that the ECB had tested ways of separating user identities from their payment details. He added:
“The payment will go through, but nobody in the payment chain would have access to all the information.”
According to the Bank for International Settlements, nearly two-thirds of the world’s central banks are exploring the potential launch of digital currencies by running practical experiments.
Panetta concluded that a digital euro would lead to a fundamental change in the way payments and the financial system would function, highlighting the possibility of being “programmable” and allow for payment automation similar to smart contracts that already exist in the crypto industry.
By the end of the year, Panetta said that the central bank would complete its new oversight framework for private digital assets and cryptocurrency providers.
According to the executive board member, crypto assets like Bitcoin are “very dangerous animals” and are “largely used for criminal activities,” which consume large amounts of energy.
While there is no responsible legal entity, regulating decentralized cryptocurrencies is extremely difficult.