ECB President Keen On Developing Digital Currencies, Gives Green Signal to Private Players

Christine Lagarde, the President of the European Central Bank has said that he agency is eager and extend its role in the development of central bank digital currencies (CBDCs).

Last Wednesday, while speaking to French business magazine Challenges, Lagarde said that ECB wants to play an active role in the development of digital currencies. However, she added that the ECB will first evaluate the “the feasibility and merits of a CBDC” before adopting any such project.

Lagarde’s statement comes just at a time when major global economies like China, the U.S. and others are seriously working on CBDC projects. The good thing is that in this interview, Lagarde gave a green signal to private organizations to join them and extend their help in making digital currencies.

This is a big plus to projects like Facebook Libra which has faced major regulatory backlash in the last few months. However, Facebook’s entry in the crypto space has already forced several regulators and government bodies to take action.

Several businesses and banking institutions have already recognized and acknowledged the potential of using blockchain-based digital currencies for cross-border remittances. Last year, Wall Street banking giant JP Morgan said that it is developing its own digital currency JPM Coin to instantly settle trillions of dollars in settlements for its global clients.

Last month in December 2019, the ECB also formed a cryptocurrency task force which will work along with the European central banks and closely monitor the benefits and costs of developing a eurozone CBDC.

Lagarde said that CBDC can have a significant impact on the bloc’s financial sector along with some changes in eurozone’s monetary policies. As reported by Reuters, she also stated that the ECB should stay “ahead of the curve” on this matter.

She also mentioned that the ECB won’t be staying in the way of other private organizations working on similar projects.

This is not for the first time that Lagarde has gone on supporting cryptocurrencies. Back in 2018, during the World Economic Forum, and as the chief of the IMF, she said that the world should not ignore crypto developments.

Well, the U.S. which is having a dominant position in the global economy is seeing CBDC as a threat. If CBDCs connected to multiple-fiat currencies becomes a reality, it can possibly undermine the dominant position of the U.S. Dollar as the global reserve currency.