The president of the European Central Bank (ECB), Christine Lagarde, has thrown her weight behind the bank’s active involvement in the development of a central bank digital currency (CBDC) to address the demand for faster and cheaper cross-border payments.
Speaking to French magazine Challenges, she discussed the most probable threats to the global economy this new year. She named a down turn in trade and a range of uncertainties, geopolitical risks, and climate change, as the things to look out for. As far as the global economy is concerned, she stressed that the EU “is still the most powerful economic and trading area in the world, with enormous potential.”
When asked about the ECB’s dedication to the exploration of a CBDC, she spoke passionately about the pressing need for a fast and low cost cross-border payments solution. She said;
“ECB will continue to assess the costs and benefits of issuing a central bank digital currency that would ensure that the general public remains able to use central bank money even if the use of physical cash eventually declines.”
According to Lagarde, the ECB remains active in examining the feasibility and merits of a CBDC, as such means of influence on the financial sector and transmission of monetary policy. She said that the ECB had formed an expert taskforce set to work closely with national central banks to examine the feasibility of a euro area CBDC.
When asked about any current efforts to launch a CBDC at the ECB, she said;
“We are working on all aspects of CBDC, with in-depth analysis of costs and benefits of such a new form of central bank money. It will take a while before we will communicate on our conclusions.”
The ECB president had previously demonstrated a friendly stance towards the crypto space. She said back in December that the ECB should always be ahead of the curve when it comes to stable coin demand. Before she took over as the ECB boss, she had voiced her commitment to make sure that institutions promptly adapt to the rapidly changing financial environment. At the moment, the ECB is all for a digital Euro equivalent just as China is all for a digital Yuan equivalent. The European financial block does not want its citizens holding too much of it though.