Commenting on the ongoing market volatility in the crypto market, Fabio Panetta indicated that stablecoins remain vulnerable just like cryptocurrencies carry other types of risks.
Digital Euro Development and Testing to Start in 2023, Last Three Years
Fabio Panetta, an executive board member of the European Central Bank (ECB), has indicated that the central bank digital currency (CBDC) or the name digital euro, is likely to become a reality in about four years. It is being designed to come with features for person-to-person payments.
When speaking at the National College of Ireland, Panetta pointed out that the ECB could commence the development and testing of various solutions as early as 2023. This development and testing phase could take about three years. He added that making the digital euro a legal tender and with a person-to-person application is likely to help intensify the adoption.
Stablecoins as Risky as Other Cryptocurrencies
Panetta further commented on the ongoing market volatility, where the value of most coins has plummeted, including TerraUSD (UST) losing its peg to the US dollar. He pointed out that stablecoins, such as Tether (USDT), were not risk-free and carried certain perils similar to investing in other cryptocurrencies.
“The recent developments in the market for crypto-assets illustrate that it is an illusion to believe that private instruments can act as money when they cannot be converted at par into public money at all times,” expressed Panetta.
Panetta also insisted that although cryptos are claimed to be trustworthy and free from third parties, the risk involved is too much for them to serve as a reliable method of payment. Cryptos behave more like speculative assets, which Panetta indicates raises public policy and financial stability concerns.
The estimates given by most EU officials indicate that policy and legislation on the launch and use of the digital euro could be in place in five years. Earlier on in March, Panetta indicated that Europeans would accept the digital euro because it is coming to address their payment needs.