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Christine Lagarde said that fiat is still going to play important role in the future of finance even though the ECB has not taken its decision on the CBDC for the region.
The president of the European Central Bank (ECB) Christine Lagarde has stated that any CBDC developed by the EU would not be a replacement for fiat. The bank’s president spoke on the digital euro this during the Franco-German Parliamentary Assembly on September 21.
Lagarde said that the EU apex bank has been studying operational challenges associated with a possible central bank digital currency (CBDC), but maintained that there is no projection that any developed digital currency for the Eurozone would be a complete replacement for cash.
Lagarde said that fiat is still going to play important role in the future of finance even though the bank has not decided on the possibility of a CBDC for the region.
“A digital euro could be a complement to, not a substitute for, cash,” Lagarde stated. “It could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”
Lagarde is an advocate of the digitization of the euro. Last September, she said that she will ensure adaptation to the changing financial sphere by Europe’s institutions.
She acknowledged that a lot would depend on how well the COVID-19 pandemic was contained. She said that there has been some economic recovery but that it has been “incomplete and uneven”
In so much that the ECB has not yet made plans to create the digital euro, the president’s emphasis has been on its complementary role rather than a replacement for fiat.
“At European level, this should be complemented by accelerating progress towards the Digital Single Market to help deliver economies of scale for digital firms, while addressing key concerns around cybersecurity and data protection,” she said.
Lagarde said that the task force to study the modalities for the digital euro will be constituted in “coming weeks”. Last November, the ECB published its CBDC report which was presented to the public to gain insight into their opinion. The bank is among a number of apex banks that are taking a critical look at CBDC.