DeutschECB chief Christine Lagarde made it clear in a press release yesterday that the digital euro is the focus of her work. With the CBDC, the EU wants to react to growing competition in the field of means of payment. It is not only intended to outdo cryptocurrencies. Because new types of systems are becoming increasingly popular, the authorities are pushing for a timely solution.
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ECB in a Hurry Because of Digital Euro
The European Central Bank (ECB for short) is in a hurry. It wants to publish the digital euro as soon as possible. Christine Lagarde, President of the ECB, assured yesterday in a press conference that the CBDC is the focus of her work.
“It is of critical importance for us to (…) lay the legal framework for a digital euro,” said Lagarde.
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It is not the first time that the French politician has emphasized the importance of the digital euro in public. The EU’s CBDC has been in its development phase since 2023. Initially, the start of a prototype was planned, but a full publication is now certain.
The underlying technology could reach series production this year, but the digital euro must overcome further hurdles in order to actually become widespread in the EU. EU laws must allow the digital euro.
Experts believe that the publication of the digital euro could be delayed until 2028 due to legislative processes.
CBDC in the EU: That’s why Christine Lagarde is Panicking
Local authorities are pushing ahead with the launch of a CBDC in the EU with the intention of countering the growing crypto market with their own product. For a long time, ECB President Lagarde denied the added value of Bitcoin and Co.
Years ago, Lagarde caused a stir on the part of the crypto scene. In 2022, for example, she described cryptocurrencies as “worthless”. She criticized that digital assets like Bitcoin were uncovered. She did not mention that there is an entire network of computers behind them, and that fiat currencies like the euro are uncovered.
Lagarde already presented the digital euro as a better alternative to cryptocurrencies in 2022. After all, she explained, the ECB is behind the CBDC. The authority therefore guarantees this.
Before taking office at the ECB, Lagarde admitted in 2019 as Director of the International Monetary Fund that cryptocurrencies were decisively disrupting the financial industry.
“We as the IMF are concerned about financial stability. We don’t want innovations that put the system in such distress.”
What remains unspoken is that a popularization of the cryptocurrency would mean a loss of power for the ECB. There is fear of a departure from the euro. Fiat currencies like the euro are an important instrument of power for politics. Central banks like the ECB cannot control cryptos.
In addition to cryptocurrencies, the existing monetary system also has to face other competitors. Over the last few years, the ECB has already noticed a decrease in cash payments in favor of card payments. The beneficiaries of this development are mainly US corporations such as Mastercard and Visa.
In addition, the US government is pushing ahead with the distribution of stablecoins, which could increasingly move into everyday life in the future. With the digital euro, the EU wants to provide its own alternative for all new payment methods.
Because central banks have almost unlimited control over CBDCs, they are considered direct opponents of cryptocurrencies. Many users may experience restrictions due to undesirable behavior. Switzerland rejects an e-franc in this function. In this country, it should only serve as a tool for financial institutions, but not for private individuals.
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