Christine Lagarde, president of the European Central Bank (ECB), recently spoke before the Economic and Monetary Affairs Committee of the European Parliament, sharing information about the project’s status and difficulties. With important decisions coming up in October, Lagarde said that the digital euro is still at least two years away from being a reality.
Lagarde acknowledged the skepticism among European Parliament members regarding the central bank digital currency (CBDC) project and emphasized the need to address privacy concerns.
It’s not until later in October that the [ECB] Governing Council will decide whether we can move ahead with more piloting of the project. The pilot will probably take us another two years, at least, before it’s the final say
Christine Lagarde, president of the European Central Bank (ECB).
One of the most significant concerns raised during the discussion was the balance between privacy and transparency. German centrist lawmaker Nicola Beer questioned how the ECB plans to ensure privacy while implementing transaction and holding limits, which could result in total traceability. This issue stems from the ECB’s intention to combat money laundering and prevent large CBDC holdings from disrupting the commercial banking system.
The parliament revealed last month that Stefan Berger, a German who helped draft the EU’s crypto licensing regulation MiCA, will guide the digital euro law through the legislature.
Lagarde responded by highlighting the importance of debunking conspiracy theories surrounding the digital euro, assuring that it must offer privacy without complete anonymity. She stressed the need for it to be user-friendly, free, and universally accessible.
ECB Board Member Fabio Panetta has further underscored the necessity for legislative agreement on privacy measures before issuing the digital euro. He has also previously emphasized the need for the ECB to provide a “risk-free asset” that can compete with other payment systems.
European policymakers remain divided on the necessity of a CBDC for the region. While some argue that cashless payments already exist, supporters of the project contend that Europe requires a locally controlled payment system. The declining use of cash, which plays a stabilizing role in the financial system, could push consumers towards alternatives such as stablecoins, cryptocurrencies, and CBDCs issued by other sovereigns.