The ECB’s annual euro report stressed that a digital euro may be needed to fight off the threat of “artificial currencies” from “foreign tech giants.”
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:
“One concern could be a situation in which domestic and cross-border payments are dominated by non-domestic providers, including foreign tech giants potentially offering artificial currencies in the future.”
“Not only could this threaten the stability of the financial system, but individuals and merchants alike would be vulnerable to a small number of dominant providers with strong market power,” the pair added.
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.