Christine Lagarde, President of the European Central Bank (ECB), said in a statement on Thursday that she believes the ECB will proceed with the launch of a digital euro in the next two to four years.
Lagarde addressed a virtual policy panel on 12 November along with the Governor of Bank of England, Andrew Bailey, and Federal Reserve Chair, Jerome Powell. According to her statement, a potential digital euro will be more like a compliment than a substitute for cash.
Additionally, she cleared that the ECB is not in a race to be the first to officially launch a central bank digital currency (CBDC), but her ‘hunch’ is that the bank might go ahead in that direction. Talking about a potential time frame for the launch of the digital euro, she said that the results of the recent consultation of ECB regarding the digital currency would be ready in early 2021 and the project itself may take 2-4 years before it is launched.
Lagarde added that she is aware of the efforts made by the central bank in China for the launch of digital yuan but the digital euro may take extensive time not only because of the technology but also to comply with anti-money-laundering rules and prevention of terror financing. Further, she pointed out Facebook’s Libra project to validate her point that the development of a digital currency may take several years.
Cross-Border Payments
In her speech, Lagarde pointed out the potential benefits of a digital currency including its cost-effective nature, speed, and secure network. “If the technology is cheaper, faster, more secure for the users then we should explore it and if it is going to contribute to better monetary sovereignty, a better autonomy for the euro area, I think we should explore it,” she said.
“If the technology can facilitate cross border payments, which are very laborious in quite a few corners of our big world, then we should explore it,” Lagarde added.
(Photo: IMF)
