European authorities, previously considering private blockchains for the digital euro solely for privacy reasons, have now considered public blockchains. A source familiar with the matter said, “Everyone was surprised by how quickly the US passed the law. Now they're saying, 'We need to move faster.'”
The ECB's digital euro project, which has been developing for years, has gained new momentum with the US's swift legal action. Officials are concerned that US regulations will further increase the use of dollar-denominated stablecoins. This could lead to a shift of euro deposits to the US and a further strengthening of the dollar's role in cross-border payments.
ECB Executive Board member Piero Cipollone warned in April that “Europe cannot be overly dependent on foreign payment solutions,” and said that dollar-based stablecoins posed a serious threat to Europe’s financial stability and strategic autonomy.
Prior to the US law, the digital euro wasn't expected to reside on a public blockchain. While public blockchains could facilitate the circulation of the digital euro, their transparent ledger structure raises privacy concerns. “The use of public blockchains is something EU officials are now considering more seriously,” one source said.
In its latest statement, the ECB stated that different options, including centralized and decentralized solutions and distributed ledger technology, were being evaluated in the digital euro development process, and that no final decision had been made yet.
*This is not investment advice.
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