Towards the digital euro – Christine Lagarde addressed the Franco-German Parliamentary Assembly earlier this week . The President of the European Central Bank has clarified her vision for the digital euro.
European digital currency: a complement to cash
The Franco-German Parliamentary Assembly is a binational institution, comprising 50 members of the Bundestag and 50 members of the National Assembly. During her speech on Monday, September 21, Christine Lagarde reassured her audience.
Watch live: President Christine Lagarde addresses an online meeting of the Franco-German Parliamentary Assembly https://t.co/ZLCHh2Tlyw pic.twitter.com/zvXn8OqWxA
— European Central Bank (@ecb) September 21, 2020
“Europe will be forged in crises and will be the sum of the solutions adopted for those crises” Jean Monnet
Thus, according to Christine Lagarde, the COVID-19 crisis is an opportunity to strengthen the European Union. After having proudly defended the pandemic emergency purchase program (PEPP), that is to say the injection of 1350 billion euros of liquidity into the system, the President of the Central Bank gave her vision of the future European CBDC.
She ensures that Europe will benefit greatly from the arrival of a digital currency.
“We are also exploring the benefits, risks and operational challenges of introducing a digital euro.”
This central bank digital currency will not replace cash . It will complement it and compete with cryptocurrencies.
“A digital euro could be a complement to, not a substitute for, cash; it could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”
The race for central bank digital currencies
The European Union is moving cautiously, despite pressure from the Dutch Central Bank. Indeed, the issues of cybersecurity and data protection will not be avoided.
In July, the Banque de France announced the list of 8 candidates selected for its experiments on the digital euro.
And as we learned earlier in September, Forge, the subsidiary of Société Générale dedicated to digital financial securities ( security tokens ) has chosen the French blockchain Tezos to conduct its tests.
Markets were no doubt waiting for the announcement of further quantitative easing. They will have to be satisfied with a negative rate of – 1% for the banks. The European CBDC will be an opportunity to strengthen the payment systems within the Union, according to Lagarde. Thus, “the pandemic is an opportunity to accelerate the establishment of a Digital Single Market .”
Last year we talked about also testings being made for a digital Turkish Lira.
This discourse on European-style central bank digital currency echoes statements from the People’s Bank of China. As the first economy to survive the crisis, China has slowed down its printing presses and intends to deploy its CBDC as soon as possible.