Crypto-community unimpressed as ECB president pushes for digital euro with “highest standard” privacy

The The European Central Bank (ECB) President Christine Lagarde’s new blog post is once again pushing for the creation of a digital central bank currency (CBDC) in Europe. But even though it claims that a digital euro would protect users’ privacy, the crypto community is not impressed.

The new article, co-authored by Lagarde and ECB chief executive Fabio Panetta, published on the ECB’s website, emphasized the importance of ensuring that the public has access to central bank money for payments, ie cash or a digital central bank-issued currency.

The alternative they said is that the private sector fills this gap in the market, and that new payment solutions – which are dependent on private bank deposits and often controlled by non-European companies – take over.

This can create “confusion about what qualifies as money,” the article said.

Another potential threat the couple sees is crypto, which they said “cannot guarantee one-on-one convertibility with central bank money.”

The article added that crypto, and especially the so-called unsupported crypto assets, are “not an effective means of payment.” It also noted that so-called supported cryptocurrencies – known as stack coins – “are vulnerable to runs.”

The play further emphasized that a digital euro would “complement cash” and “not replace it.”

A digital euro “would extend the availability of digital central bank money beyond its current use – for transactions between banks – to include everyone’s daily payments,” it said, adding that a digital euro would “ensure that citizens can continue to trust the monetary anchor behind their digital payments. “

Meanwhile, Lagarde and Panetta admitted that a digital euro would only be successful “if it became part of Europeans’ everyday lives.”

To achieve this, a CBDC must “add value compared to existing solutions,” the authors wrote, adding that it is still too early to decide on the details of the design, although some key points are already clear:

• it must respond to “users’ needs”;
• it should support financial inclusion for people with limited access to digital payments;
• its privacy design “must be of the highest standard,” with people having the ability to choose how much information they want to disclose “as long as they comply with applicable laws.”

“A digital euro, if carefully designed and introduced, can play a crucial and beneficial role in this endeavor, and serve as a public good for the transition of our society and economy into the digital age,” the blog post states.

The crypto community is not impressed

However, based on reactions from the crypto community on Twitter, a digital euro is not what is needed at this time, with some believing that the euro is “failing”.

Since the beginning of 2021, the euro has lost around 18% against the US dollar, reaching parity with the world’s reserve currency this week for the first time since the euro came into circulation in physical form in 2002.

Among those commenting was Lawrence Lepard, a managing partner at Equity Management Associates:

Many others also commented, with the common argument that a solution to the problem the ECB is trying to solve already exists in – Bitcoin (BTC).

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Learn more:
– The use of digital euro as a form of investment can be prevented – ECB Official
– Hawkish ECB intentions

– In the midst of the threatening economic downturn in the eurozone, the ECB’s Lagarde is worried about crypto, defi
– With the start of the war and declining markets, questions about central bank policy are multiplied

– CBDCs “An investment” to protect the Fiat system, cash will disappear, says the Swedish central banker
– “Robust” regulations are needed in the crypto and Stablecoin sector, says G20 advisory body ahead of its report in October