Fabio Panetta, a member of the European Central Bank’s executive board, feels that a digital euro will protect privacy better than a stablecoin issued by a huge IT corporation.
Diem Association, a Facebook-backed private digital currency fixed 1:1 to a fiat currency, said last month that a pilot version of its stablecoin—a private digital currency pegged 1:1 to a fiat currency—is in the works.
The ECB’s digital euro, on the other hand, would be a central bank digital currency (CBDC). It’s still a work in progress, with ECB President Christine Lagarde estimating that it will take at least four years. Panetta estimates that just figuring out how to design the coin will take two years.
Governments that reject CBDCs risk exposing their financial systems and monetary autonomy to “foreign digital giants potentially issuing fake currencies in the future,” according to an ECB assessment released on June 2. Diem was not mentioned in the report.
Panetta did not elaborate on how a digital euro would preserve privacy, save to say that the ECB would not be as eager for customer data as a private corporation. “The payment will go through,” he continued, “but no one in the payment chain will have access to all of the information.”
CBDCs, unlike cryptocurrencies, are not often decentralized. The ECB polled the public in April about its CBDC plans and found that half of those polled believe blockchain can deal with counterfeits and technical difficulties.