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ECB’s Digital Currency Plans

The European Central Bank could soon be pushed to regulate cryptocurrency. Their main concern is about Facebook’s Diem.

With Facebook’s Diem project opening a path for other Big Tech firms to create their own cryptocurrencies and stablecoins, the European Parliament legislators are now attempting to give the European Central Bank (ECB) even more regulatory power.

“We must not let Zuckerberg become a Central Bank,”

Dr. Stefan Berger, a European People’s Party Member of the European Parliament (MEP)

The proposal last September named the European Commission’s Markets in Crypto-assets (MiCA) Regulation, will mandate that the ECB will “establish uniform rules for crypto-asset service providers and issuers at EU level.”

Lawmakers are now debating amendments to the proposal which include the ECB “taking a more active role in the authorization of new cryptocurrencies.” It means that the central bank will be able to refuse certain projects from working in the borders of the EU.

If the MiCA is passed, it will make the EU the most crypto-regulated place on the planet.

Dr. Berger also stated that the ECB must be prepared for the power of global stablecoins, specifically Facebook’s Diem, a stablecoin project that aims to disrupt the traditional payments market with a small fee, scalable and fast settlement features. It was known previously as Libra.

The Libra/Diem project has spooked many lawmakers who see the currency, when launched, as a potential threat to the fiscal status quo. Politicians in Europe have drafted legislation that establishes rules for stablecoins and gives the ECB more powers over the “authorization procedure of a new cryptocurrency.”

“Facebook has more than 2 billion users,” said Dr. Berger. “By introducing their own currency, it could gain the power of a Central Bank overnight. Currencies, however, do not belong in the hands of a private company. At the end of the day, we must not let Zuckerberg become a Central Bank.”

Dr. Berger also added that a Digital Euro, will be the “best answer” to a powerful stablecoin like Facebook’s Diem.

“I hope the ECB will hurry up with establishing a digital Euro, before everyone including Vatican City have launched a central bank digital currency,” he said. “We need a safe form of digital money in a fast changing digital world.”

Right now, it looks like institutions like the ECB could be lagging behind big cryptocurrency projects – including Facebook’s Diem.

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