Today the Financial Times ran an article saying EU officials are accelerating plans for the digital euro central bank digital currency, spurred on by the passage of the US GENIUS Act for stablecoins. It also asserted that officials are mulling launching the digital euro on the public Ethereum or Solana blockchains, “rather than a private one, which had previously been expected, due to privacy concerns.”
While the first statement is undoubtedly accurate, the second one deserves examination as it potentially conflates several topics. As part of the ECB retail digital euro work, it is currently exploring potential innovations involving at least 70 organizations. A few of these are blockchain firms. This is likely the source of these ‘discussions’. But the retail digital euro never planned to use blockchain, certainly not at the base layer. Blockchain is not sufficiently performant. On the other hand, a wholesale CBDC for use only by banks would almost certainly use blockchain. The one piloted by the Banque de France leverages blockchain.
Even on the retail front, there’s also the question of how blockchains might be used. Potentially someone could lock digital euros with a custodian and issue permissionless blockchain tokens linked to the digital euro. Unlike the real thing, that involves counterparty risks. But there are other avenues to use blockchain. China’s digital yuan does not use blockchain at the base layer, but supports the use of blockchain applications and smart contracts tied to its CBDC. However, those are permissioned blockchains.
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