For the European Central Bank, the continent’s privacy, sovereignty, and financial stability are at risk.
In the European financial landscape, intense debates and growing concerns are being triggered by the recent introduction of stablecoin by PayPal.
Fabio Panetta, member of the Executive Council of the European Central Bank (ECB), has raised serious alarms regarding this new entry into the European financial ecosystem. The executive expressed his concerns during a hearing at the European Parliament’s Economic Committee, where he answered questions from lawmakers ahead of negotiations regarding a proposed launch of the digital euro.
Panetta warned that without the introduction of the digital euro, new players could emerge in the European market, offering digital payment solutions that could undermine the continent’s privacy, sovereignty, and financial stability. In his speech, he used the new stablecoin of PayPal as a tangible example of this imminent threat. PayPal, known for its digital payment services, announced its stablecoin in August, sparking excitement in the blockchain-based payments industry.
Panetta underlined that private technology companies mainly aim to expand their market share and user base, without worrying about the disintermediation of European banks. They have no incentive to ensure financial stability and will be responsible for their own rules for protecting privacy.
The rise of central bank digital currencies (CBDCs) has become a major issue globally, with the United States facing internal discussions over their implementation. Concerns about mass surveillance and loss of privacy have been at the heart of the digital euro debate, despite reassurances from officials such as Finance Commissioner Mairead McGuiness, who said it was “a project that does not aim to become Big Brother."
Despite the efforts of the ECB and the European Commission to promote the adoption of the digital euro, many directly elected members of the European Parliament continue to raise doubts about the potential benefits of a CBDC. Some argue that the combined use of cash and bank accounts already meets consumer needs.
Panetta responded to criticism by saying that the digital euro will allow users to make payments across the European Union, offering greater privacy in peer-to-peer payments and a central bank-backed digital form of money. However, many remain skeptical about the usefulness of this initiative.
Other controversial aspects include digital euro holding limits on individual accounts, designed to prevent liquidity problems and potential bank runs. These limits could limit the possibilities of use of the CBDC by users.
Meanwhile, the ECB is drafting its response to the European Commission’s proposals regarding the digital euro and the legal tender euro. Stefan Berger, a center-right lawmaker, has been appointed to lead the European Parliament’s negotiations on the digital euro. Berger was also the lead negotiator of the European Markets in Crypto-Assets (MiCA) regulation, which will come into force across the entire EU in 2025.
While some see the digital euro as a possibility for greater independence and digitalization, many continue to raise concerns related to privacy, financial stability, and the concrete usefulness of this initiative. Decisions taken in this context will have a significant impact on the future of digital payments in Europe.
Original article published on Money.it Italy 2023-09-08 07:30:00. Original title: La battaglia della Bce contro la stablecoin di PayPal
