ECB President Lagarde announces digital euro in five years

C.hristine Lagarde, President of the European Central Bank (ECB), gave another signal on Wednesday that she is serious about the plans for a digital euro. During the online event “Reuters next”, the central bank chief said she was expecting the introduction of a digital euro in the next few years.

“We will have a digital euro,” she said. “This is not for tomorrow, it will take some time to make sure there is something that is safe.” She hopes this will not take more than five years.

The ECB wants to decide by the middle of the current year whether a corresponding project should be started. “I know we have to respond to the demand in Europe and we have a demand,” said Lagarde. China is the most advanced country when it comes to digital currencies – it took the Chinese around five years to do this.

Rules for the Bitcoin

Meanwhile, an ECB public hearing on the matter concluded with a record turnout. The central bank announced that 8221 responses from citizens, companies and associations had been received. “The large number of responses to our survey shows the great interest in shaping the vision of a digital euro,” emphasized ECB board member Fabio Panetta.

The results are to be presented in spring. However, the central bank has already revealed that it is primarily the question of “privacy”, i.e. data protection, anonymity and protection from observation by public institutions that moves people on this topic. 41 percent of the feedback concerned this topic. This was followed far behind by concern about safety (17 percent) and interest in Europe-wide coverage (10 percent).

The central bank has assured that if you introduce a digital euro, this should initially be done in addition to cash and not as a replacement for it. Nevertheless, many people seem to be concerned that the digital euro could lead to more surveillance and control.

The Governing Council should decide

The further procedure is now apparently like this: In the spring, the central bank wants to publish a detailed evaluation of the entries for the pros and cons of the digital euro. On the basis of the consultation results and further internal work, the Governing Council is to take a decision in principle in mid-2021 on whether the project will be pursued further. Most recently, doubts had also been publicly expressed as to whether the monetary union would get something like this done quickly – and whether the advantages of a digital euro were big enough for private individuals.

In response to a question from FDP MP Frank Schäffler, the federal government dropped the following sentence: “Based on the Eurosystem’s experience with numerous projects in payment transactions, a period of several years should be estimated for such a major project.” And the head of the bank for International settlement of payments, Agustín Carstens, had said in the FAZ interview that he sees the benefits for consumers as “limited”. That could speak for an e-euro only for banks and companies.

A digital euro would also be a response to private sector initiatives such as Bitcoin or the Diem project (originally: Libra), which is largely supported by Facebook. In contrast to both, a digital euro would be under strict supervision by the central bank.

Lagarde also spoke out in favor of regulating Bitcoin. This must happen on a global level. Bitcoin is a highly speculative investment object, in which there were “some strange deals and some interesting and totally reprehensible money laundering activities”.

The ECB President also commented on the vaccination process. You do not want to push yourself in front of the vaccination. “But I really want to be vaccinated,” said the 65-year-old French woman. If it is helpful to convince people of the need for vaccinations, she will also publicly document their vaccination: “For my sake, I’ll show the world my arms for it.”

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