Christine Lagarde, president of the European Central Bank (ECB), supports the active involvement of the bank in developing a central bank digital currency (CBDC). To address the demand for faster and cheaper cross-border payments.
Lagarde addressed the most possible threats to the global economy in 2020. In an interview with French business magazine Challenges published on January 8. Among which she listed a slowdown in trade and a number of uncertainties, geopolitical risks, and climate change. However, Lagarde noted that the EU is still the world’s most powerful trade and economic region with tremendous potential.
Not to act as observers of a changing world
When asked about the commitment of the ECB to the exploration and development of a CBDC. Lagarde stressed the urgent need for quick and low-cost transfers. The area where she sees a leading position instead of remaining observers of a changing world.
Lagarde said the ECB will continue to assess the costs and benefits of issuing a digital currency from the central bank. That would ensure that the general public remains capable of using money from the central bank. Even if physical cash use eventually decreases.
Lagarde recalled the bank continues to examine a CBDC’s feasibility. And merits as such payment methods could influence the financial sector and monetary policy transmission. The ECB set up an expert task force to work closely with national central banks. To examine the feasibility of a CBDC euro area.
When asked about current initiatives to launch a CBDC at the ECB. A representative said they were working on all aspects of CBDC in somewhat vague terms, with an in-depth cost and benefit analysis of such a new form of central bank money. Before they communicate on their conclusions, it will take a while.
Lagarde has previously demonstrated a friendly attitude towards digital currencies. Having said last year in December that the ECB should be ahead of the curve in terms of stablecoins demand.
When Lagarde was still the head of the International Monetary Fund (IMF) and candidate for the next president of the ECB last September. She said that she would focus on ensuring that institutions respond quickly to the rapidly changing financial climate. However, the ECB is open to the idea of an equal digital currency but would like to stop people from keeping too much of it.
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