Christine Lagarde – President of European Central Bank (ECB), supports 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.
In an interview with French business magazine Challenges published on Jan. 8, Lagarde discussed the most likely threats to the global economy in 2020, among which she named a downturn in trade and a range of uncertainties, geopolitical risks and climate change. Going further, Lagarde said that “the EU is still the most powerful economic and trading area in the world, with enormous potential.”
Taking a leading position than remaining observers
When asked about ECB’s dedication to the exploration and development of a CBDC, Lagarde emphasized the urgent demand for fast and low-cost payments, the field where she sees the taking a leading position, rather than remaining observers of a changing world. As such, Lagarde 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.”
Lagarde recalled that the bank continues examining the feasibility and merits of a CBDC as such means of payment could exert influence on the financial sector and transmission of monetary policy. She stipulated that the ECB formed an expert task force set to work closely with national central banks to examine the feasibility of a euro area CBDC.
When asked about current initiatives to launch a CBDC at the ECB, a representative told that:
“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.”
Lagarde has previously demonstrated a friendly stance towards digital currencies, having said in December last year that ECB should be ahead of the curve regarding the demand for stablecoins.
Last September, when Lagarde was still the head of the International Monetary Fund (IMF) and nominee to be the next president of the ECB, she claimed that she would focus on making sure that institutions promptly adapt to the rapidly changing financial environment.
In the meantime, ECB remains open to the idea of a digital euro equivalent but would want to stop citizens holding too much of it.