The European Central Bank (ECB) has released a new research report regarding Central Bank Digital Currencies (CNBC’s). He opposes them to stablecoins, and judges that institutions are the only ones able to preserve monetary stability.
ECB studies central bank digital currencies
“Wasteful”, not stable enough, expensive… The European Central Bank (ECB) has never hidden its great distrust of crypto-assets. And this, even if it relied on the blockchain to carry out tests concerning its future digital euro.
The institution is indeed playing a balancing act: it is teaming up with Tezos (XTZ) to see if the blockchain can serve it… While shouting out loud when it comes to euro stablecoins. It thus recently wished to have a right of veto on the latter.
A new ECB research report confirms this position with regard to MNBCs. This is based on 150 academic works and targets particular questions of privacy. Regarding consumer expectations, the report points to an apparent inconsistency that extends beyond the restricted circle of cryptocurrencies:
Although consumers tend to place a high value on privacy in their survey responses, they still tend to give away their data for free , or in exchange for very small rewards.
The report cites several reasons for this, which mainly relate to a lack of information and knowledge. Hence a concern: will market forces be able to protect the privacy of users, if they are already unable to do so themselves?
MNBCs, the only “real” alternative to cash?
The ECB report also points to the obsolete appearance of cash, considered dated:
“ Since cash is only available in physical form, it […] is not ‘appropriate’ for the digital age . Regulations that aim to maintain their widespread use are likely to incur large economic costs without clear benefits. »
This is a point on which the majority of the crypto community agrees. But the ECB, however, considers central bank digital currencies to be the only “viable” alternatives to cash. The reason? Cryptocurrencies are deemed still too unstable and could unbalance the Eurozone, according to the report:
The introduction of digital cash in the form of MNBC appears to be the only solution to guarantee a smooth continuation of the current monetary system .
The ECB fears for the “monetary sovereignty” of the euro, in particular the mixture – which it describes as explosive – of BigTech and cryptocurrencies , in particular stablecoins. She thus cites the Terra affair as a concrete example of the related risks.
For an institution whose goal is to preserve the euro, this positioning is not really a surprise. However, it is questionable whether the ECB is aware of the speed at which payment ecosystems are changing. Its digital euro project will not see the light of day before at least 2025. This is particularly late when other regions of the world already have to function MNBCs.