- The new President of the European Central Bank (ECB), Christine Lagarde, presented her plans for the development of a digital Euro at a press conference yesterday.
- During the press conference she acknowledged a high demand for stablecoins, but emphatically ignored Bitcoin.
At a press conference in Frankfurt, Germany, the new President of the European Central Bank (ECB), Christine Lagarde, presented her plans for a new task force of the bank for a digital Euro. The President of the ECB plans to establish a task force by mid-2020 to accelerate the development of a digital Euro and define its objectives.
Are we trying to cut costs? Are we trying to eliminate the middlemen? Are we trying to achieve free inclusive financing? There are a number of objectives that can be pursued.
The aim is to be “ahead of the times” of the Stablecoins, as the ECB President describes it. Even though Lagarde didn’t mention Facebook and its Libra project explicitly, it can be assumed that this was certainly a reason for the new initiative. Lagarde explained that the time is ripe for a “digital currency of the central bank to come to life”.
ECB wants to respond to competition from stablecoins
Although the mandate of the European Central Bank is primarily aimed at creating price stability in the euro zone, the time has now come to examine how this can be achieved with a digital currency. Lagarde also discussed how important it is to draw the line between the different types of assets, such as Bitcoin, stablecoins and state backed digital currencies. She acknowledged a high demand for Stablecoins, but explicitly ignored Bitcoin:
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.
As Lagarde explained, before developing a digital euro, the objectives must be set. In addition, the efforts of the national central banks should be bundled in order to accelerate development and benefit from the expertise of the various countries of the European Union:
The digital currency – we have set up a taskforce and we will accelerate the effort of this taskforce, drawing on the resources of the entire Eurosystem, meaning the national central banks that already participate in that research and that have already committed to the project in terms of experimentation, pilots here and there. So harnessing on all those experiments that have taken place and all the research that has already been put into this effort, together with the work that has been done here also. I think we’re trying to do that by mid-2020.
The new ECB President referred to the interest in Canada and Great Britain in creating a digital state currency:
And I think that there is also great interest outside of our regional area. I know, for instance, that Canada, the UK, certainly other countries way beyond, are also looking very deeply into that to see if it makes sense, what purpose it serves and how we can best deliver on it.
At the beginning of November, the European Union reiterated its firm stance towards private digital currencies such as Libra and stated that no global stablecoin should be issued by large companies until all legal questions have been properly resolved.
Two weeks ago there were reports suggesting that France will be the first country in the European Union to start testing a digital euro in 2020. The announcement was confirmed by Francois Villeroy de Galha, Governor of the French Central Bank.