Digital Euro Arrives in Four Years

Member of the Executive Board of the European Central Bank (ECB), Fabio Panetta believes that the digital euro would preserve privacy better than stablecoins issued by large tech companies.

– If the central bank gets involved in digital payments, privacy will be better protected, as we are not like private companies. We have no commercial interest in storing, managing, or monetizing user data – Panetta told the Financial Times in an interview yesterday.

Last month, the Diem Association, backed by Facebook, announced that a pilot version of their stablecoin, which is a private digital currency pegged 1:1 to fiat currency, is on the way. Panetta described Diem, formerly known as Libra, as an "unstable token," FT reports.

On the other hand, the ECB’s digital euro would be a central bank digital currency (CBDC). This is still a framework plan, according to ECB President Christine Lagarde, which could take at least four years. The design phase would take a minimum of two years, Panetta said.

The interview comes two weeks after the ECB advised governments to pay attention to CBDCs.

In a report dated June 2, the ECB stated that governments hesitant about CBDCs risk exposing   their financial systems and monetary autonomy to "foreign tech giants that could potentially  offer artificial currencies in the future." The report does not mention Diem.

Panetta did not explain how the digital euro would protect privacy other than suggesting that the ECB would not be as „data-hungry“ for consumer information as a private company. 

– Payments will go through, but no one in the payment chain will have access to all the information. – said Panetta.

Unlike cryptocurrencies, CBDCs are generally not decentralized. In April, the ECB surveyed   the public about its CBDC plans and found that half of the respondents believe that blockchain could    handle fraud and resolve technical shortcomings.