European Central Bank (ECB) President Christine Lagarde said the decision whether to launch a CBDC will be made in the middle of this year.
However, the Governor of the Central Bank will decide whether to move forward with a digital euro issuance. After this decision, the central bank said that the real development of the digital currency (CBDC) will take at least four more years. Speaking to Bloomberg, Lagarde said:
“But the whole process – let’s be realistic about it – will in my view take another four years. Maybe a little more, but I would hope that we could keep it within four years because it’s a technical endeavour as well as a fundamental change.”
Lagarde suggested that the decision whether to proceed with a CBDC issuance will be final “by mid-2021”. He said:
“We have to make sure we’re doing it right. We owe it to the Europeans. They need to feel safe and secure. They need to feel they are holding a digital banknote backed by a central bank.”
Earlier, Lagarde had said that it would supplement the cash rather than replace a digital euro. Consumer preferences saw an increase in digital contactless payments as Europeans switched to online platforms for retail needs during the pandemic. The European Central Bank has therefore considered a potential CBDC issue to remain competitive in the midst of the digital wave.
With the digital revolution at our footsteps, “more than four in five Europeans regularly use the internet, up from one in five two decades ago,” said Lagarde. Global payments have been increasingly on the surge, as the pandemic has driven the digitization trend forward.
CBDCs in major economies
Despite discussing the potential issuance of a digital euro, Lagarde took a more cautious approach to CBDCs such as the Federal Reserve. Fed Chairman Jerome Powell had previously said that the bank would not give up when reviewing the digital dollar. The goal he claimed was not to be the first to deploy the central bank digital currency – rather the problem was thoroughly researching CBDCs before going forward with a version.
China has taken another approach. Last year, the People’s Bank of China began piloting digital currency electronic payments (DCEP) in major cities in China. In addition, digital Yuen was gifted with a $ 1.5 million held in the city of Shenzhen.