On September 4, Fabio Panetta, a European Central Bank executive, published an official report on the progress of its central bank digital currency (CBDC) project, noting the central bank was nearing the end of its research and investigation phase. He has also vehemently criticized the American fintech giant, PayPal and its PYUSD stablecoin for “exploiting” the loosely regulated private stablecoin market.
Danger Looms in EU as ECB Prepares for CBDC
According to the report, Panetta revealed the investigation phase of the digital euro (CBDC) project is scheduled to conclude in October, 2023. Upon conclusion of the investigation phase, the Governing Council of the ECB will decide on the next phase of the project, which is expected to be focused on further refining and testing the technical infrastructure and business arrangements for the digital euro.
🧵 A digital euro would be a new form of central bank money, says Executive Board member Fabio Panetta. It is now up to legislators to ensure it would replicate key characteristics of cash in the digital sphere, particularly its privacyhttps://t.co/nQJzYylwpV
1/3 pic.twitter.com/4XPlk83Lwj
— European Central Bank (@ecb) September 4, 2023
The ECB executive clarified that the digital euro proposal would protect payment sender and receiver details from the Eurosystem while requiring wallet operators to gather identification data to comply with anti-money laundering rules.
Addressing the European Parliament, Panetta claimed that “the Eurosystem would be unable to see the personal details of digital euro users or connect any payment information to private individuals.”
He emphasized the European CBDC will hold a “legal tender status”, enabling people the right to have access to and pay with the digital Euro and giving an advantage over stablecoins, whether privately operated or decentralized, effectively pushing the freedom of stablecoins out of the picture and involving a more passive watch on the people’s assets and holdings. Panetta said,
“A digital euro would be introduced by public authorities, under a European regulatory framework. It would pay due attention to orderly adjustments in the financial sector while offering payment service providers a platform for innovations with pan-euro area reach.”
Panetta Lauds CBDC and Slams PayPal
In addition, Panetta criticized PayPal and its PYUSD stablecoin and claimed that it threatens the European Union’s financial stability. He said tech companies could “impede the adoption of the digital euro if they monopolize stablecoins like they dominate the tech sector”. PayPal launched its own dollar-pegged stablecoin, PayPal USD, in August
He warned about the emergence of numerous tech firms including PayPal who are only concerned with generating revenue and creating monopolies.
Interestingly, this is also one of the major points in the traditional banking rulebook that has created a monopolistic financial ecosystem, as they often are the only lenders to private banks and have aggressive interest rates that lead the banks to abuse the common people with even higher interest rates, making them desperate to escape the traditional economy in the first place, leading us to the creation of Bitcoin back in 2009.
During the European Parliament’s Committee on Economic and Monetary Affairs meeting on Monday, Panetta emphasized that private businesses have no incentive to ensure equal access to their technology but to expand their customer base and gain market share. In contrast, he highlighted the benefits of using the European CBDC.
He stated the digital euro would be introduced by public authorities, under a European regulatory framework, with safeguards built in to “protect consumer privacy and preserve the primacy of the banking sectors”. The ECB executive added,
“Europe should not shy away from being ambitious in developing an instrument that serves the public interest by making Europe and the euro fit for the digital age.”
CBDCs Will Destabilize the Financial Ecosystem
These developments indicate that the European Central Bank is fervently moving ahead with plans for a digital euro, leaving many concerned about the severe risks posed to individual privacy and the specter of government overreach. It should be noted that CBDCs like the digital Euro have the potential to strip individuals of their right to financial privacy.
We share the same goal, brother! Reject and Resist CBDC. Come support @antiCBDC_ collective, a movement that promotes grassroots actions against CBDCs. Be part of the revolution!
— Jared Infinity (@axiejared) September 4, 2023
With the advent of a fully digital currency, every transaction can be monitored and scrutinized, leaving no room for financial autonomy. CBDCs could provide a direct connection between a country’s central bank and its citizen’s financial activities, giving the banks a detailed picture of every financial transaction, endangering individuals’ privacy and potentially leading to widespread surveillance.
As per the Cato Institute, a Washington-based libertarian think tank, a centrally governed digital currency could undermine both the foundation and future of financial markets by reducing credit availability, disintermediating banks, and strengthening government control over payment networks while endangering economic freedom and privacy.
Several prominent organizations have fervently criticized the introduction of CBDCs. Previously, the World Bank had stated,
“The introduction of CBDC could disrupt the existing financial intermediation structure. In addition, depending on design and country context, CBDC could pose risks to financial stability, financial integrity, data protection and privacy, and cyber resilience.”
It is likely, that the use of CBDCs in cross-border payments will increase the risk of currency substitution in recipient countries and, in crisis periods, could increase the speed of capital flow reversals, thereby weakening domestic monetary authorities’ ability to control monetary and exchange rate policies.
Digital euro is another and elevated form of ECBs power grab and ECs centralized control over EU nations.
— Alenka Valher (@cepulje) September 4, 2023
The Original Intention of Cryptocurrency will be Distorted
Moreover, CBDCs would also impede the effectiveness of “decentralized” cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH) among many others. Unlike these decentralized digital tokens, that foster strong decentralization and autonomy, CBDCs will eventually put individual financial autonomy at risk, creating a breeding ground for abuse and discrimination.
As per many market analysts, the idea of pitting CBDC against cryptocurrencies seems ludicrous. Bitcoin (BTC) was created with the sole intention of providing an alternative to the current banking system, which many believe to be corrupt, manipulative, and hegemonic.
CBDC = financial slavery
BTC = financial freedomIt’s that simple.
— CryptoJack (@cryptojack) September 7, 2022
Whereas digital currencies issued by central banks are seen to increase the possibility of government intervention in daily transactions. Joe Burnett, head analyst, Blockware Solutions, a US-based Blockchain Infrastructure Company explained,
“The whole point of Bitcoin is creating an asset with no counterparty risk and no dilution risk. CBDCs inherently could never build this. And they don’t want to.”
CBDCs also raise concerns about the marginalization of unbanked populations. While the promise of financial inclusion is often touted, the reality may be far from it. Technological barriers, cybersecurity vulnerabilities, and limited access to digital infrastructure could further exacerbate inequalities and leave vulnerable individuals without the means to participate fully in the financial system.
US Lawmakers Criticize CBDCs
Several market experts have expressed dissatisfaction, highlighting the potential risks and challenges associated with the introduction of CBDCs. Earlier this year, United States Congressman Warren Davidson took a firm stance against CBDCs. He called not only for their complete ban but also for the criminalization of any effort to design, build, test, develop, or establish any sort of central bank to back digital currency.
As a matter of fact, Davidson is not the only person against the introduction of CBDCs. Just recently, the Bank for International Settlements (BIS) study revealed over 90% of central banks actively exploring digital currencies although it noted that their design should be followed with caution to avoid any forms of risk.
The claim that FedNow is not the first step toward a CBDC would be more easily digestible were we not aware of the Biden administration’s steady barrage of hostile broadsides against cryptocurrencies.
Between 2008-22, the Fed partnered with a handful of big banks to print $10…
— Robert F. Kennedy Jr (@RobertKennedyJr) April 10, 2023
Recently, US presidential candidate Robert Kennedy Jr. also slammed CBDCs. He speculated the technology could be used to curtail firearm purchases or limit gasoline sales. Therefore, Kennedy Jr. put forth a proposal in March to outlaw the use of CBDCs as money in his state. His concerns align with those of Florida Governor Ron DeSantis, who rallied against the notion of a CBDC in the state.
It is not merely “ideal” that major changes in policy receive specific authorization from Congress; it is constitutionally required.
Unaccountable institutions cannot impose a CBDC on Americans. They will tell us that CBDC won’t be abused but we are wise enough to know better.… https://t.co/OqJ27Lym2L
— Ron DeSantis (@GovRonDeSantis) April 10, 2023
