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ECB's Lagarde Has 'Hunch' Digital Euro Will Launch in 2-4 Years
ECB President Christine Lagarde says the impetus for a central bank digital currency could come from the need to facilitate cross-border finance.
Updated Sep 14, 2021, 10:30 a.m. Published Nov 12, 2020, 7:04 p.m.
European Central Bank President Christine Lagarde said she believes the region's monetary authority will move to launch a digital version of the euro in the next two to four years.
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"We might well go in that direction," Lagarde said Thursday on a virtual panel with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. "My hunch is that it will come."
ECB officials have previously disclosed they are conducting research into a central bank digital currency, and Bank of Finland Governor Olli Rehn told Reuters last month he believes a digital euro is "very likely" to debut in the next decade.
Read more: Bank of Spain to Weigh Digital Currency Design Proposals, ‘Implications’ Through 2021
Lagarde said a digital euro would take extensive time to develop, including not just the underlying technology but anti-money-laundering controls and prevention of terrorism financing. She noted that China's central bank has been working on a digital version of its yuan for several years.
As reported by CoinDesk, China is already conducting trials of the digital yuan.
"If it is going to facilitate cross-border payments, we should explore it," Lagarde said Thursday, though she does not expect paper money to disappear.
"A digital euro will not be a substitute for cash," she said. "It will be a complement."
For his part, Fed Chair Powell reiterated the U.S. central bank is evaluating the merits of a digital dollar, but has not yet made a decision on creating a digital currency. The Fed is looking into the merits and possible technical solutions to a digital dollar, though it does not appear likely to launch one within the next few years.
Read more: Debate Rages on Whether a Digital Dollar Will Unleash Inflation
The Bank of England's governor, meanwhile, said there may be privacy concerns for privately issued stablecoins, and CBDCs may be the "answer to that bar." Bailey has said in the past he would like to see a global framework for regulating stablecoins.
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CFTC Launches Digital Assets Pilot Allowing Bitcoin, Ether and USDC as Collateral
Acting Chair Caroline Pham has unveiled a first-of-its-kind U.S. program to permit tokenized collateral in derivatives markets, citing "clear guardrails" for firms.
What to know:
- The CFTC has launched a pilot program allowing BTC, ETH and USDC to be used as collateral in U.S. derivatives markets.
- The program is aimed at approved futures commission merchants and includes strict custody, reporting and oversight requirements.
- The agency also issued updated guidance for tokenized assets and withdrew outdated restrictions following the GENIUS Act.
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