Central Banks and digital currencies
Speech by Christine Lagarde, President of the ECB, at the “Deutsche Bundesbank online conference on banking and payments in the digital world”, in which she analyzes the situation in the global payments landscape, the main trends, risks benefits of innovation in payments and the possibility of issuing a “digital euro” by Central Banks and the implications that all this would entail for the European Union payment system.
According to Christine Lagarde “innovation in payments raises new questions about whether the ECB should drive initiatives to integrate retail payments in Europe, and even whether it should issue a digital euro”. Lagarde states that the ECB is exploring the benefits, risks and operational challenges of issuing a “digital euro”.
Among the main benefits that innovation in payments has brought to customers, she stands out higher competition making possible easier, faster and cheaper transactions, or new technology that fosters financial inclusion. However she also points out to new risks that “pose important questions of sovereignty”, particularly in regards to private payment systems or digital currencies issued by private companies”. These new risks range from abuse of market power to ownership of critical data or operational risks due to potential disruption in payments if technology fails.
The introduction of a “digital euro” (Central Bank Digital Currency) could be one of the tools to “ensure that European payments are fit for a global digital economy so that, in the face of changing risks, we can preserve the autonomy of European payments”.