ECB board member Fabio Panetta assures: A state-managed digital euro will protect people’s privacy – unlike the Facebook-backed “unstable coin” called Diem.

Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), believes that a digital euro would be better for privacy than a stablecoin issued by a large tech company.

Panetta in an interview with the Financial Times published today:

“If the Central bank becomes involved 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 users ‘ data.”

Last month, the Facebook-backed Diem Association had said that a pilot version of its stablecoin – a private digital currency pegged 1:1 to a fiat currency-was on its way. Panetta describes Diem, formerly Libra, as an “unstable coin,” according to the FT.

Two years for design

In contrast, the ECB’s digital euro is supposed to be a central bank digital currency (CBDC). It is still a preliminary plan – according to ECB President Christine Lagarde, implementation could take at least four years. The development of the coin’s design alone could take two years-at least according to Panetta.

Just two weeks ago, the ECB had advised governments to pay attention to CBDCs. In a June 2 report, the ECB stresses that governments that shy away from CBDCs risk exposing their financial system and monetary policy autonomy to “foreign tech giants that may offer artificial currencies in the future.“ However, the report does not address Diem.

Panetta did not comment further on how a digital euro would protect privacy in his view – he merely hinted that the ECB would not be as hungry for consumer data as a private company. Panetta:

“The payment will go through, but no one in the payment chain would have access to all the information.“

Unlike cryptocurrencies like Bitcoin, CBDCs are generally not decentralized. In April, the ECB asked the public about its CBDC plans and found out: half of all respondents think that blockchain technology can deal with counterfeiting and fix technical glitches.

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Text credit: Decrypt

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