Christine Lagarde, the President of the European Central Bank (ECB) has once again espoused a bullish position on a possible digital Euro while warning about the potential risks of private stablecoins. Several nations, including China, are developing central bank digital currencies (CBDCs) with the consensus among mainstream finance experts being that sovereign digital currencies are better than decentralized cryptos from a regulatory standpoint.
Europe Needs Digital Euro to Stay with the Times
In a Nov. 30 article for the L’ENA hors les murs magazine, the ECB chief offered an exhaustive commentary on the future of money while highlighting the need for innovation to not erode the principles of trust. Commenting on the role and place of a digital Euro against the backdrop of COVID-19 and a possible decline in cash usage, Lagarde identified a European CBDC as a necessary instrument of the region maintaining a presence in the emerging digital economy.
As we enter the digital age, the nature of money is changing, I explain in @AnciensENA. The ECB must ensure that payments in the euro area remain innovative and highly trusted by all Europeans https://t.co/fY7w5EJBaH pic.twitter.com/M5k7y3OCxU
— Christine Lagarde (@Lagarde) November 30, 2020
Commenting on the matter, Lagarde wrote:
“Central bank money is unique. It provides people with unrestricted access to a simple, essentially risk-free and trusted means of payment they can use for any basic transaction. But for retail use it is currently only offered physically in the form of cash. A digital euro would complement cash and ensure that consumers continue to have unrestricted access to central bank money in a form that meets their evolving digital payment needs.”
According to the CBDC chief, a “properly designed” European CBDC would allow for seamless integration between the private sector and the payments industry thus allowing the former to create digital Euro-based business processes. Lagarde also declared that a digital Euro will also help in fostering economic unity across the region.
As previouslyby BTCManager, Germany’s finance minister recently called for a quick decision on the EU CBDC. Earlier in September, the ECB that it would soon release a report on plans for a digital Euro.
Stablecoins Threaten Monetary Sovereignty
While praising blockchain and distributed ledger technology, Lagarde argued that the erosion of trust in the crypto payment system is a flawed concept. The ECB President further identified stablecoins as posing serious risks.
According to Lagarde, stablecoins gaining broad-based adoption could threaten national and international monetary sovereignty as well as global financial stability. The ECB President also remarked that stablecoins attaining high transaction volume capability could negatively affect commercial banks.
As part of the editorial, the ECB head also railed against stablecoins helmed by big tech firms like Facebook adding that such projects could have significant privacy and consumer protection issues. As previously, Libra is set for a limited roll-out in January 2021 with the release of a dollar-pegged stablecoin.