An executive member of the European Central Bank (ECB) said the digital euro would protect consumer privacy as the financial institution has no commercial interest in personal information.
A board member of the European Central Bank, Fabio Panetta, is confident that the ECB would respect consumer data as they have no commercial interest in user data. He pointed out that they would protect consumer privacy more than the private stablecoins issued by tech companies.
In a recent interview with the Financial Times, Panetta said: “When the central bank interferes in digital payments, privacy will be better protected[…]because we are not like private companies. We have no commercial interest in storing, managing or monetizing user data. “
The ECB, like several other central banks in different parts of the world, is working on the development and issuance of their central bank digital currencies (CBDC). The need for the central banks to develop the digital versions of fiat currencies arose due to the increasing popularity of stablecoins and the potential threat of Facebook’s upcoming launch of Libra stablecoin.
The central banks don’t want to hand over financial control to big tech companies like Facebook. Hence the need to develop and issue CBDCs. The ECB under Christine Lagarde is actively investigating the various ways in which it can use the digital euro.
Panetta told that Financial Times that stablecoins like Libra should be called “instable coins”. The ECB has pointed out several times that central banks need to watch out for CBDCs. According to the ECB, central banks that fail to do so risk exposing their financial systems and handing over control to foreign tech giants in the future.
Some countries, such as China, have made tremendous strides in their CBDC development. The world’s second largest economy is already testing the digital yuan to see how it performs in the real world.