ECB to Set Objectives for Own Digital Currency, Lagarde Suggests
The European Central Bank (ECB) should determine objectives for its digital currency taskforce by mid-2020, ECB President Christine Lagarde said during her first policy meeting.
What’s the Purpose of a Digital Euro?
Earlier today, the ECB’s Governing Council met to decide the benchmark interest rate and the monetary policy. After the event, new ECB President Christine Lagarde held her first press conference, along with ECB Vice-President Luis de Guindo.
She said that the central bank hoped to figure out objectives for a digital currency before the first half of next year ends, adding that the ECB should be “ahead of the curve” on that matter.
Before developing a digital euro, the ECB has to set its priorities and determine what it wants to achieve with the taskforce. Lagarde stated:
Are we trying to reduce costs? Are we trying to cut out the middleman? Are we trying to have inclusive finance at no cost? There is a whole range of objectives that can be pursued.
She admitted the high demand for stablecoins, though explicitly ignoring Bitcoin. The new ECB President referred to the interest shown by Canadian and British counterparts.
My personal conviction is that given developments we see, not so much in bitcoin but in stablecoins projects… we’d better be ahead of the curve because there is clearly demand out there that we have to respond to
ECB Pondering Pros and Cons of a Digital Currency
Last month, we reported that the bank was thinking about issuing a digital currency. The proposal was part of a draft that seeks to ban “high-risk” crypto projects. The ECB’s target is Libra, the global digital currency developed by Facebook, which has been repeatedly criticized by European leaders.
Now the central bank is debating the pros and cons of issuing its own digital currency that would provide holders with a direct claim on the ECB.
With a digital currency available in parallel with the euro, consumers will have a cheap and fast means of payment alternative. The move would have a significant impact on the bank’s fiscal policy. For example, the central bank will be able to inject funds directly into the economy to achieve its inflation target.
On a side note, the ECB left the interest rate unchanged, taking a wait-and-see mode.
What do you think about an ECB-issued digital coin? Share your thoughts below!
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