AssetsMar 25, 2023

The digital euro will protect Europe's payment autonomy, argues Christine Lagarde

The President of the European Central Bank believes that the central bank's digital currency can bring many benefits.

Christine Lagarde recently stated that the digital euro could give the European Union greater resilience and payment autonomy. She shared her thoughts on the subject during a virtual event organized by the Bank for International Settlements. The President of the ECB noted, inter alia, the fact that many Europeans are now addicted to payment applications.

The digital euro is intended to protect European payment autonomy

Due to the banking crisis in the United States, many people have decided to transfer their funds to the sector of digital currencies, which, among other things, ensure transparency. Although banking and government institutions do not like crypto assets, they have a completely different attitude towards the so-called central bank digital currencies (CBDC).

Speaking at a virtual conference organized by the Bank for International Settlements, Christine Lagarde made it clear that there is a "trend to use digital payments". She added that they are safe, readily available and inexpensive.

The president of the ECB also stated that despite the potential introduction of CBDC, cash will survive. Speaking about this, she emphasized that it provides anonymity, while digital currencies do not.

European CBDC project in the research phase

At the end of December 2022, the European Central Bank published a report on the progress of work on the digital currency. While the digital euro project has strong political support at this stage, Christine Lagarde said it must balance the competing goals of ensuring privacy as well as preventing financial crime.

In the opinion of the President of the ECB, the central bank's digital currency should provide a level of privacy at least equal to the current electronic payment solutions in order to maintain the attractiveness of this mechanism. In addition, in her opinion, legislators must "find the right balance between the social value of broadly understood privacy and the public interest in preventing illegal activity."

During a speech given in early 2023, one of the ECB's executive board members, Fabio Panetta, stated that the digital euro should primarily complement, not replace, other electronic payment methods or cash.