The ECB and the European Commission held a conference on the digital euro on Monday. The contours of this project concern the ecosystem, especially the issue of personal data.
The European Commission (EC) and the European Central Bank (ECB) organized a major conference on the future of the digital euro on Monday, entitled “Towards a legislative framework allowing a digital euro for citizens and businesses”. The European Commission has confirmed that it will make a legislative proposal in the first quarter of 2023 on this digital version of the currency of the euro zone.
“I am very much looking forward” to this legislative proposal, ECB President Christine Lagarde said at the conference. For the latter, such a proposal would send a “strong signal of political support” to the ECB’s projects.
Write “digital euro in law”
The ECB and the EC have been examining political, legal and even technical questions about the digital euro for several months. This proposal “will enshrine the digital euro in law and regulate its essential aspects”, indicated Vladimir Dombrovskis, the Executive Vice-President of the EC.
The digital euro will not replace other payment systems (cash or digital payments), specifies the ECB. In addition, the digital euro “must be used primarily as a means of payment and not be a financial investment instrument”. Finally, it will be “free” and available to everyone within the euro zone.
For Europe, the digital euro will be “better” than cryptos
Despite this meeting with a lot of excitement, it will only be in October 2023 that Europe will decide whether or not to proceed with such a project, which will not see the light of day until 2026 or even 2027 after several tests. At that time, the crypto ecosystem, which is very critical to this project, will chart its course.
In a question / answer section of this project, the ECB asked this unique question: “why is a digital euro better than stablecoins and crypto-assets?”. And his answer is just as important if you know the crypto ecosystem’s commitment to privacy.
“The digital euro will be a central bank currency. This means that it is backed by a central bank, designed to meet the needs of citizens: it is risk-free and respects privacy and data protection”, perhaps we read.
Ecosystem reactions after this meeting are not long in coming. The speech of Vladimir Dombrovskis is not “reassuring”, says Alexandre Stachchenko, co-founder of Blockchain Partner and director of blockchain and cryptos at KPMG France.
“The Slippery Slope”
“We have a discussion on something presented that is important to the European Commission if it has not been defined and that we do not have any information on the possibility before 2025-26. The fact that the only country that remains in this format of currency, which is China, should alert us to the attractive slope that we have unfortunately taken, under the pretext of an urgent digitization of society”, thought later.
For his part, Gilles Cadignan, the co-founder of Woleet, recalled that the digital euro project was part of the reaction to the Libra cryptocurrency project from Meta (formerly Facebook). “But the Libra is easily beaten in the same EU for the simple reason that a private money initiative from a centralized actor, no matter how strong, is easily opposed by sovereign states”, determines the end this.
“The EU (wrongly) is more afraid of Libra than Bitcoin, but now the central banks and the ECB in the first place are starting to realize that Bitcoin is a serious threat that must be taken into account anyway. The euro central bank aims to be the institutional alternative to Bitcoin and the anarchy of cryptocurrency, but since the ECB can never reveal it, the announcements struggle to explain the real stakes or even the usefulness of this MNBC [monnaie numérique de banque centrale, NDLR] when most of the euros we handle are in digital form”, he said.
For the latter, a problem also exists in the invasion of privacy of users. “Unlike cash, with central bank digital currencies we will know who is using the money and why! 1984 is a bit late but we are here for good”. For its part, the ECB intends to be clear on the issue of user privacy.
“The Eurosystem has no interest in collecting payment data from individual users, in tracking payment behavior or in sharing such data with government agencies or other public institutions,” the questions read. / response from the ECB.