European CBDC is required to counter Stablecoins, non-European Big Tech: ECB Chief Economist
The chief economist at the European Central Bank (ECB), Philip Lane, Europe said it requires a digital euro to oppose the foothold that the dollar associated with stablecoins and US electronic payment systems gets into the regional financial system.
The proliferation of electronic payments provided by large tech companies, such as Apple Pay, Google Pay and Paypal, “exposes Europe to the dangers of economic pressure and coercion,” Lane said, according to text of a speech at University College, Cork in Ireland on Thursday.
“The digital euro will provide a safe, accepted general digital payment option under the management of Europe, which reduces hope for foreign service providers,” Lane said. “Having a digital euro will also limit the possibility of day-to-day currency stablecoins that get a foothold as a medium of exchange in the euro area.”
Lane pointed out that 99% of the Stablecoin market is made up of tokens that are in the US dollar. That has increased the likelihood of dollar stablecoins that get traction in the euro area and payment systems have become “directly or indirectly anchored by the dollar than the euro.”
ECB, like central banks in other developed economies around the world, is Exploring the likelihood of introducing a central digital bank currency (CBDC). Responding to competition obtained by stablecoins and corporate-run payment services is often among the reasons mentioned for doing so.
The case for a CBDC can be especially larger for the ECB, given the eurozone covers many countries, Lane said. The single money is used throughout the 20 European Union member states, and the eurozone lacks a single payment system due to different legacy standards from the country to the country.
“The Digital Euro presents a unique opportunity to overcome the ongoing destruction of retail payment systems throughout the Euro area,” he said.
