The European Central Bank (ECB) is looking into the benefits and risks of a digital currency, according to its president, Christine Lagarde.
- Rather than as a replacement for cash, a digital euro would "complement" traditional money, she said in an introductory speech at the Franco-German Parliamentary Assembly on Monday.
- The central bank digital currency would further provide an alternative to "private digital currencies" for European Union citizens, according to Lagarde.
- This, she said, would "ensure that sovereign money remains at the core of European payment systems."
- The latter comment references fears from regulators and governments that a massively popular cryptocurrency could threaten the power of central banks to control monetary policy and even cause a shift away from the use of fiat money.
- Addressing this perceived threat from the as-yet-unlaunched Facebook-backed libra payments project last October, France’s economic and finance minister Bruno Le Maire said libra was usurping the sovereign right of states to issue their own currencies and could undermine the European project.
- “Do we really want to give private interests such power, given the consequences it would have on trade and financial stability?” Le Maire said at the time. “I cannot countenance one of a sovereign state’s most powerful tools, monetary policy, falling under the remit of entities not subject to democratic control.”
- Last month, in another speech, Lagarde said foreign providers had taken the lead on payments innovation due to the lack of integrated infrastructure in Europe, but a digital euro would allow the bloc to make up lost ground.
- She said then that a future digital euro might be used for retail payments and be "accessible to a wide audience."