ECB slams PayPal for launching its own CBDC

A senior executive at the European Central Bank has provided an update on the progress of the digital euro project, while citing PayPal's stablecoin as an example of what they don't want.

On September 4, Fabio Panetta, a member of the European Central Bank’s Executive Committee on the Economic and Monetary Affairs Committee of the European Parliament, said that the central bank’s research and investigation phase is nearing completion.

It will soon decide whether to move into the next phase of potential development and issuance of a digital euro.

The European Central Bank first released its report on CBDC in October 2020, and three years later, they are ready to move on.

Big Tech Warning

The first key aspect, he said, was legal tender status, before adding that this would give people the right to use the digital euro and make payments.

Panetta pushed for usability and accessibility across the eurozone, saying CBDC should be as easy to obtain “as electricity and water.”

The second major part is new payment solutions based on CBDC. Panetta said this would "enhance privacy and data protection," but he did not elaborate. He added that risks related to money laundering and terrorist financing will be minimized.

However, there are warnings for big tech companies and for PayPal, which recently launched its own stablecoin pegged to the U.S. dollar.

"We should not leave the private sector, including big tech companies, alone to provide such services," he said.

“Private payment service providers, including PayPal, have no incentive to limit the use of their stablecoins or the scope of services they offer. Quite the contrary: their goal is to expand their customer base and gain market share.”

He warned that companies like PayPal would generate revenue and create monopolies, but that's exactly what banks do.

CENTRAL CURRENCY CONTROL

Centralized private companies will also retain full control over their stablecoins.

Still, central banks would have greater control over what is essentially programmable money, but ECB executives didn’t mention that either.

Speaking in the European Parliament, Panetta concluded that a digital euro would provide the EU with a "digital payment method that, like cash, unites us because it can be used by everyone, everywhere."

“This is also an opportunity for Europe to lead the international debate on central bank digital currencies, focusing on privacy in the digital age and maintaining monetary sovereignty.”

According to the Atlantic Council’s CBDC Tracker, only 11 countries have fully launched CBDCs, most of which are in the Caribbean. However, according to media reports, 130 countries are studying them.