European Central Bank President Christine Lagarde Says ECB Bullish on Digital Currencies

They Want Active Role in Crypto, Make Rom for Private Solutions

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On the tail of reports from China that they are already doing trials with a Central Bank Digital Currency (CBDC), the European Central Bank (ECB) has kicked into gear and amped up and open to exploring a European Cryptocurrency.

Though the ECB, which manages the largest economy in the world the European Union, is still at an evaluation stage, the bank’s President Christine Lagarde was recently quoted in a French magazine called Challenges that the ECB is open to a CBDC and has now set up a task force:

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“Innovation in the area of payments is racing ahead in response to the urgent demand for quicker and cheaper payments, especially cross-border ones. The Eurosystem in general and the ECB, in particular, want to play an active role in this field, rather than just acting as observers of a changing world. In 2018 the Eurosystem launched an infrastructure to provide pan-European instant payments with direct settlement in central bank money (TIPS, i.e. TARGET Instant Payment Settlement). This enables banks to process payments between themselves in a matter of seconds, 24 hours a day, 365 days a year, all over Europe. This caters not only to the preferences of younger generations, who want to make round-the-clock payments with their smartphones but also to firms, which want to optimise payment and supply chain processes.”

“In terms of the road ahead, the ECB will continue to assess the costs and benefits of issuing a central bank digital currency (CBDC) that would ensure that the general public remains able to use central bank money even if the use of physical cash eventually declines. However, the prospect of central bank initiatives should neither discourage nor crowd out private market-led solutions for fast and efficient retail payments in the euro area. We are looking closely into the feasibility and merits of a CBDC, also because it could have major implications for the financial sector and for the transmission of monetary policy. At the end of 2019, we created an expert task force at the ECB that will work closely with the national central banks to study the feasibility of a euro area CBDC in various forms, covering all the practical aspects, including how to minimise possible unintended side-effects.”

Lagarde on cryptocurrencies: We are looking into the feasibility and merits of a central bank digital currency that would ensure that people can continue to use central bank money even if the use of physical cash eventually declines. We want to play an active role (5/6)

— European Central Bank (@ecb) January 8, 2020

At the International group at the Bank for International Settlements (BIS), the CBDC is still a work-in-progress.

“It remains to be seen whether there is a role for central bank digital currencies in this mission. But this is something that needs further study, and several central banks are studying CBDCs. But on this issue, we should also distinguish to so-called retail CBDCs that are available to general users, from the wholesale kind mentioned earlier, which are used by financial institutions. There is still a lot of work to be done on this issue,” said Hyun Song Shin, Economic Adviser and Head of Research at the BIS in mid-December in a BIS podcast.

Hyun Song Shin explains how the BIS Innovation Hub, a new project designed to support central bank collaboration on new technology and to pool resources, puts central bankers at the cutting edge of innovation.

About Richard Kastelein

In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, ' The Hitchhiker's Guide to the Seas' travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, the Netherlands where he has set down his anchor to raise a family and write.

Founder and publisher of industry publication Blockchain News (EST 2015) and director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He has written over 2500 articles on Blockchain technology and startups at Blockchain News and has also published in Harvard Business Review, Venturebeat, Wired, The Guardian and a number of other publications.

Kastelein has an Honorary Ph.D. and is Chair Professor of Blockchain at China's first blockchain University in Nanchang at the Jiangxi Ahead Institute software and Technology. He has over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the EuropeanCommission's SME Instrument programme as a startup assessor and as a startup judge for the UK government's Innovate UK division. Kastelein has spoken (keynotes & panels) on Blockchain technology at over 50 events in 30+ cities.

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