ECB president, Lagarde gets behind CBDC

10 Jan 2020

EU flag President of the European Central Bank, Christine Lagarde backs the bank’s active involvement in the development of a central bank digital currency (CBDC) to facilitate fast, more cost-effective cross-border payments.

As part of an interview with French business magazine Challenges published this week, Ms Lagarde highlighted the likely key threats to the global economy this year, namely geopolitical risks and climate change, going on to add that “the EU is still the most powerful economic and trading area in the world, with enormous potential.”

In regard to the development of a CBDC, Lagarde stressed the pressing demand for fast, low-cost payments: “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.”

The ECB president added that the bank continues to look into the feasibility and merits of a CBDC, and has established an expert task force to work with national central banks to scrutinise the viability of a CBDC for the euro area.

An ECB representative told Coin Telegraph: “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 adopted a positive stance towards cryptocurrencies in the past. Whilst still head of the International Monetary Fund and nominated to be the next ECB president, Lagarde said in September that she would focus on ensuring institutions would swiftly adapt to the evolving financial environment.

At the time Ms Lagarde commented: “In the case of new technologies – including digital currencies – that means being alert to risks in terms of financial stability, privacy or criminal activities, and ensuring appropriate regulation is in place to steer technology towards the public good. But it also means recognising the wider social benefits from innovation and allowing them space to develop.”