By
Bhushan Akolkar
January 3rd, 2024
According to Jürgen Schaaf, one of the ECB’s Advisor, the bank’s experiments and research into a digital euro can be viewed as a guarantee that one will be launched.
One of the biggest tasks ahead of the European Central Bank (ECB) is the development of its Central Bank Digital Currency (CBDC), the Digital Euro. While other regulators around the world are responding in a haste to the potential of cryptocurrencies being used to evade sanctions, the ECB President, Christine Lagarde is now calling for an expedited process with respect to the development of the Digital Euro.
According to the ECB President, the inaugurated task force on Digital Euro is working very hard to ensure the process moves forward, and she affirms that she backs such moves. The ECB currently has a CBDC or Digital Euro investigation period billed to span for two years.
“I think we have to be a little bit ahead of the curve if we can on that front. So I hope we can accelerate the work. I will certainly support that,” Lagarde said, in response to a question about the role of central bank digital currencies in sanctions against Russian financial institutions.
Things are quite sketchy at this point as the initial plan when the ECB began looking into the Digital Euro was to understand the basic needs for a CBDC within the bloc. According to Jürgen Schaaf, one of the ECB’s Advisor, the bank’s experiments and research into a digital euro can be viewed as a guarantee that one will be launched.
However, the heavy sanctions being imposed on Russia by countries in the European Union and the likelihood of evading these sanctions through digital currencies have ignited a new narrative with speeding up regulators’ involvement in the space. While the chances of a Digital Euro being developed are becoming more and more plausible, the support from the ECB boss and the current realities within the region might help speed up the development of the Digital Euro in the near term.
Is the ECB Lagging Behind in the Digital Euro Development?
Compared to a few nations with advanced involvement in their Central Bank Digital Currency development, the ECB may be tagged to be lagging behind in its Digital Euro development. Countries like the Bahamas have long launched its CBDC dubbed The Sand Dollar, while the Nigerian government has also debuted its e-Naira which is currently inactive use in the nation.
The People’s Bank of China (PBoC) is arguably the largest economy that has advanced its work with respect to its e-CNY project. The CBDC development has extended to its retail trials with the new form of money-making its debut at the past Beijing Olympics Games earlier this year.
While many people believe the advent of CBDCs is billed to create a new order in the financial ecosystem, there are many experts who believe that the financial system is currently digitized and that CBDCs will make not much difference. Either way, Central Banks like the ECB are designing their e-money to fit into what works specifically for their regions.