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EU Considers Public Blockchains for Digital Euro: Report
Alarmed by the growth of dollar-pegged stablecoins after the US’ passage of the Genius Act, European Union officials are considering launching a digital euro on a public blockchain such as Ethereum or Solana.
In a statement, the European Central Bank (ECB) mentioned it was considering “different technologies — both centralised and decentralised — in the development of the digital euro, including distributed ledger technologies.”
Previously, the EU’s planned central bank digital currency (CBDC) was expected to be launched on a private network due to concerns that tokens issued on public blockchains could compromise users’ privacy.
According to reports, conversations within the EU changed after the US passed the Genius Act in July, a federal law that makes it easier for major corporations to issue their own stablecoins. Proponents argued the Genius Act would be a boon for stablecoins and, in turn, US dollar dominance.
That sentiment was echoed by Pierre Gramegna, the managing director of European Stability Mechanism, a European Union intergovernmental organisation. He mentioned that if successful, it could affect the euro area’s monetary sovereignty and financial stability. He urged the European Central Bank to make the digital euro a reality to safeguard Europe’s strategic autonomy.
One EU official, quoted anonymously, noted that the passage of the Genius Act “rattled a lot of people” who now want to accelerate the development of a digital euro. ECB leaders and EU officials say a digital euro could bolster Europe’s financial autonomy by creating a home-grown payment system to rival American payment giants like Visa.
While EU officials worry about the privacy implications of launching a token on a public blockchain, the digital euro has nevertheless been fraught with controversy and conspiracy theories since the ECB launched its investigation in 2021. Many consumers want to avoid a scenario where the central bank would be able to digitally track their spending with CBDCs.
To address these concerns, the ECB stated that it would not have access to personal data. That information would remain with commercial banks, which would host the digital euro. Citing the potential for government surveillance, Republican lawmakers in the US have sought to preempt the development of any CBDC. Recently, the House of Representatives passed the annual National Defense Authorization Act, which includes a provision to block the Federal Reserve from issuing a digital dollar.
This article has been published in dlnews.com via Yahoo News.
