ECB says digital euro may be needed to combat ‘artificial currencies’

The European Central Bank has warned that a CBDC or digital euro may be required to head off the spectre of “artificial currencies” dominating cross-border payments. In ECB’s annual review of the euro dubbed “The international role of the euro”, economists Massimo Ferrari and Arnaud Mehl conveyed concerns over the rise of artificial currencies led by unnamed “foreign tech giants” — likely a veiled reference to Facebook’s Diem project:

The ECB has long-held concerns over the rise of artificial currencies or stablecoins in Europe and previously asked EU lawmakers for veto powers regarding private stable projects such as Facebook’s Diem coin. The ECB has taken a careful approach to launching a digital euro, with ECB’s president Christine Lagarde noting in January that “it’s going to take a good chunk of time to make sure it’s safe,” and adding, “I would hope that it’s no more than five years.”

The report also stated that the “specific design features of a CBDC would be important for its global outreach,” and emphasized the need to incentivize the use of a digital euro through interoperability, the anonymity of users, and being able to conduct offline payments. However, the economists stressed that anonymity would also have to be tempered with the need to have enough information on CBDC users in order to “build safeguards” and identify misuse of funds for terrorism financing, cross-border criminal activities, and money laundering.

ECB says digital euro may be needed to combat ‘artificial currencies’, Cointelegraph, Jun 3