Christine Lagarde, President of the European Central Bank (ECB), has mentioned the possibility of a digital euro. The ECB is seriously considering a digital central bank currency (CBDC), and has now launched a public survey on the subject.
Yesterday, Christine Lagarde, former director of the International Monetary Fund (IMF) and current president of the European Central Bank (ECB), commented on the digital euro in a tweet. The CBDC project is still in its early stages and a public survey is now being launched. An official report on the project, which we have summarized here, was published a month ago.
Payments are becoming increasingly digital
According to Lagarde, more and more Europeans are turning to digital alternatives for payments and investments. The ECB is currently exploring the possibility of a digital euro and should be ready to launch it as soon as possible if necessary. Now, the opinion of the citizens is required.
"We have just launched a public survey so that consumers and Europeans can have the opportunity to express their preferences, and tell us whether they would use a digital euro as much as they would a euro coin or a euro banknote, knowing that it is central bank money that is available, and is reliable." - Christine Lagarde, President European Central Bank (ECB)
This initiative is also supported by the Bank for International Settlements (BIS) i.e. the "Bank of Central Banks". Earlier this year, the BIS published a survey showing the extensive work being carried out by central banks on CBDCs. The Bank of China has already launched a comprehensive pilot project.
Dangers of the initiative
Lagarde expressed her opinion on CBDCs in the context of a longer tweet thread, focusing on the Corona Pandemic. Similar to the IMF a few weeks ago, she also believes that a loose monetary policy is still necessary; also in light of the second wave. A digital central bank currency could intervene more directly in the economy, which would possibly contribute to the increasing devaluation of fiat currencies.
The fact that central banks will be able to intervene directly in the future not only raises concerns about the loss of purchasing power that critics fear, but also about data protection. As protection against the threat of monetary devaluation, gold, Bitcoin and other assets limited in supply could increasingly come into the focus of some investors.