The head of the European Central Bank (ECB) noted during a conference on the digital version of the Euro that authorities in Europe have already made good progress in examining the rationale, as well as the potential advantages and risks of a central bank digital currency (CBDC).
Christine Lagarde remarked in a video message that their efforts are now shifting to the actual design of the digital euro and its inclusion into the legal framework. The top executive emphasized that EU legislators would play a significant role in this field and that she is looking forward to the bill the “European Commission will propose shortly” for establishing the digital euro.
Along with the European Parliament and the Council of the EU, the executive body in Brussels is one of the key players in the intricate legislative process of the European Union and is in charge of proposing new laws.
Lagarde further noted in her remarks that legislators now have to find a balance between key public interests. She highlighted privacy and the legal tender status of the digital euro as the top public issues around the CBDC.
The head of the eurozone’s monetary authority noted that if the currency is to be appealing, it needs to live up to people’s expectations in that area, noting that 43% of respondents in the public consultation on the digital euro identified privacy as the most crucial characteristic of the incoming CBDC.
Lagarde said that they need to offer a level of privacy comparable to that offered by the current generation of electronic payment systems.
Expanding on the second point she brought up, Lagarde insisted that the legal tender status of cash as central bank money is a constitutional obligation. She also made it clear that the same standard should be followed by the digital euro, which would enable users to use it to make payments anywhere. The ECB chief elaborated that this should encompass peer-to-peer payments, e-commerce, and digital payments made in physical businesses.
Christine Lagarde listed the emergence of cryptocurrencies like bitcoin and ether among the major developments leading to a potentially disruptive transformation of the conventional model of payments in her speech and emphasised the significance of the upcoming Markets in Crypto Assets legislation (MiCA).