Planned cryptocurrencies issued by global tech giants like Facebook might disrupt the European financial system, a European Central Bank board member warned Friday.
“Big techs may pose considerable risks from an economic and social perspective and they may restrict, rather than expand, consumer choice,” said Fabio Panetta, who sits on the ECB’s executive board.
“While they could offer convenient and efficient payment solutions,” Panetta said, “they also risk endangering competition, privacy, financial stability and even monetary sovereignty.”
Pancetta’s warning came as the coronavirus pandemic accelerates a shift towards cashless and digital payments, which the ECB director believes is likely to persist once the health crisis is over.
Facebook has been looking into creating its own cryptocurrency — known as a stablecoin — called Libra, which it touts as a way to lower costs for consumers around the world, eliminating the high fees of cross-border transfers.
But the plan has caused controversy and worried global regulators who expressed concern of a privately-run currency.
Stablecoins could mean money is reduced to a “club good”, offered in return for membership fees to a platform, Panetta said.
Europe should also avoid dependence on foreign providers for cashless payments that would “harm competition”, he added.
The ECB is currently undergoing a public consultation on whether to adopt a digital currency.
Panetta has previously expressed support for a digital euro as a way of reinforcing financial sovereignty of the European Union.
In September, the European Commission unveiled plans to regulate cryptocurrencies, proposing rules that could limit the development of Libra and similar projects.
“No global asset-backed crypto-asset arrangement should begin operation in the EU until the legal, regulatory and oversight challenges and risks have been adequately identified and addressed,” they said.
The ECB “is the only one to be allowed to issue a currency,” French Finance Minister Bruno Le Maire previously said.