For quite some time now, there have been talks about central bank digital currencies. One such venture seems to focus on creating a digital euro. Surprisingly, this concept has now received indirect support from Christine Lagarde.
Will the Digital Euro Enter the Next Stage?
- Despite the COVID-19 pandemic, the Euro has performed surprisingly well in 2020, especially when compared to the Euro.
- Many governments and central banks see this pandemic as a good time to further explore central bank digital currencies.
- Until now, there was no real enthusiasm for a digital Euro, but the concept appears far from dead.
- ECB President Christine Lagarde appears to favor such a digital Euro, even though the concept still carries plenty of potential risks.
- During a speech for Germany’s Bundesbank’s conference, she argued how the EU needs to keep developing digital payment methods.
- Transitioning to digital payments has received an expected boost from the COVID-19 pandemic, as cash transactions are no longer accepted in most locations.
- At the same time, Lagarde confirms digital payments are currently dominated by a handful of large players, which isn’t ideal.
- Introducing a digital euro will allow for innovation, but associated risks need to be examined thoroughly.
- Over the coming weeks, the Eurosystem task force will share its findings on the viability of a digital Euro.
- Switching to a CBDC will pose challenges for central bank money and banknotes in general.
- Addressing those concerns will be crucial to determine the future success of this digital currency.
- For now, no official decisions regarding the CBDC have been made, but time is running out.
- Bank of France governor Francois Villeroy de Galhai stresses how Europe cannot lag behind on digital currency research.
- No details were provided on which infrastructure can be used for this CBDC.