- European Central Bank President Christine Lagarde said on Monday that the ECB was “very serious” about creating a digital euro.
- At a virtual IMF event, Lagarde said the pandemic had caused many structural changes, including the way we “work, trade and pay.”
- She said e-commerce had increased by almost a fifth in volume and size between February and June 2020 due to the pandemic.
- But she said the digital euro would only be a “supplement” to cash and would never replace it.
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The European Central Bank is one step closer to studying the creation of a virtual currency after President Christine Lagarde said on Monday that he was “seriously considering” the digital euro.
At a virtual meeting hosted by the International Monetary Fund, Lagarde said: “The ECB takes digital Europe very seriously.”
She said the COVID-19 pandemic had led to many structural changes, including the way we “work, trade and pay”.
Digital payments have increased significantly as a result, especially in countries like Germany and Italy, where “money has been king,” Lagarde said.
“People [used to] walk around with banknotes [Germany and Italy],” she said.
Lagarde said the pandemic had e-commerce increased by almost a fifth in terms of volume and sales between February, when the outbreak first hit Europe, and June this year, when many of the toughest blocking restrictions fell.
“There is much more confidence in digital payments and significant change is underway,” she added.
In a study published earlier this month, the ECB said the digital euro would help citizens access fast money in the rapidly changing digital world.
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“We must be prepared to issue a digital euro if and when developments around us require it,” said Fabio Panetta, a member of the European Central Bank’s executive board, in a blog post related to the study. “That means we have to prepare for it now.”
Earlier, the bank said the Eurosystem – the ECB and the national central banks that have adopted the euro – would decide by the middle of next year whether to continue with the proposal.
The Eurosystem will need to take into account key concerns such as potential cyber risks, the right to privacy and whether a central bank introducing a digital currency means that it will acquire sensitive information for consumers.
It will also need to consider legal considerations, such as the implications of the different design features and the basis for issuance.
Lagarde said the digital euro would not replace money, but only supplement it.
“The digital euro will never replace money. It’s a very good addition and a very good partial substitute for what is done physically.”
Cryptocurrencies such as Bitcoin or Ethereum have grown in popularity among merchants and online shoppers. The total value of the crypto market has risen to about $ 360 billion this month, from about $ 175 billion just three years ago, according to CoinMarketCap.com.
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A number of central banks have begun testing digital payments.
The People’s Bank of China began trial use of the digital yuan, currently the world’s first digital currency backed by a central bank, in four major cities earlier this year, according to the Guardian.
Sweden’s Riksbank has been testing the electronic form of the crown for several months.
But other major central banks such as the Federal Reserve, the Bank of Japan and the Bank of England have taken a more valuable approach to the introduction of digital currencies backed by a central bank.