European Central Bank head Christine Lagarde has said that the bank should decide by early next year on whether or not it will be releasing a digital Euro.
During an Online policy panel held on Nov 12, she stated that the European body was not rushing to be first at releasing a Central Bank Digital Currency (CBDC). She then added that the results of the consultation the bank made about the subject should be ready by early next year as well. The bank had consulted widely while trying to determine whether having a CBDC would be prudent. It appears answers have been given and proposals have been considered.
Lagarde said:
“At that point in time we will make the decision as to whether or not we go forward with the digital euro. My hunch, but this is a decision that will be taken collectively is that we might well go in that direction.”
Concerns still linger
The ECB president pointed to concerns raised about a European CBDC and stated clearly that the concerns had been noted. She added that the ECB would pinpoint concerns to do with money laundering, as well as the potential financing of terrorism through extremist groups.
Being right over being first
The ECB president urged for patience as well because the body wanted it to be done right with all relevant factors considered. She cited the difficulties faced by Facebook’s Libra and China’s Digital Yuan as examples of why the project needed time before eventual rollout. Her timeline is anywhere between two and four years.
“This is a project that will probably take us two, three, four years before it is launched.”
The ECB president communicated a CBDC stance that is similar to the one that was taken by US FED chair Jerome Powell. The FEDs stance was that America had no interest in being first but rather being right. FED chair Jerome Powell also happened to be on the online panel with Lagarde where he seconded her comments.
Unlike Jerome and the FED, Lagarde has been very clear on her personal position on CBDCs. The ECB chair supports the idea and would like to see a digital Euro go live soon. Caution is the keyword as efforts are made to ensure the right rails are in place for the arrival of a CBDC in the Eurozone.
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