The European Central Bank (ECB) has been analysing the benefits and risks of a digital currency, according to its president, Christine Lagarde.
Rather than as a replacement for cash, a digital euro would ‘complement’ traditional money. The central bank digital currency would further provide an alternative to ‘private digital currencies’ for EU citizens, according to Lagarde.
This would ‘ensure that sovereign money remains at the core of European payment systems’. This remark was made amid regulators and governments fear that a massively popular cryptocurrency could threaten the power of central banks to control monetary policy and even cause a shift away from the use of fiat money.
In September 2019, in another speech, Lagarde said foreign providers had taken the lead on payments innovation due to the lack of integrated infrastructure in Europe, but a digital euro would allow the bloc to make up lost ground. Furthermore, a future digital euro might be used for retail payments and be ‘accessible to a wide audience’.