In an interview with a French magazine published on 8 January, Christine Lagarde, president of the European Central Bank (ECB), made clear her strong support for the bank’s active involvement in the development of a Central Bank Digital Currency (CBDC). The move, she specified, would be a good one to meet the growing demands of a faster and cheaper cross-border payment system.
EU Still the Best
Lagarde also talked about potential threats to the global economy this year. The chief among these, according to her, is the nosedives in trade markets, uncertainties, geopolitical tensions, and climate change. Despite the still-unresolved Brexit issue, Lagarde noted that the EU still is ‘the most powerful economic and trading area in the world’, carrying great potential.
Presence Not Merely that of an Observer
Lagarde was questioned on ECB’s stance on CBDCs, to which she answered with a strong emphasis on the growing demands for faster and cheaper cross-border payment systems. Lagarde envisages ECB taking a leading position in the field rather than being an observer of the rapidly changing global stage.
Lagarde revealed that the ECB is exploring the advantages and practicality of a CBDC as a means of payment and how it can influence the financial sector and monetary policies. She further disclosed that ECB had set up an expert task force that would work closely with national central banks for examining the feasibility of a CBDC in the European economy.
As to the time when ECB would launch its own CBDC, Lagarde replied that the bank would only communicate its conclusions after all aspects of CBDC are analyzed in detail. While this signifies the growing importance of CBDC, it is certainly not the first time that a central bank has expressed interest in developing its own currency.