The European Central Bank (ECB) could soon take the first step toward launching a digital version of the euro.
In a new interview with Bloomberg TV, Lagarde says the ECB’s decision-making Governing Council will determine whether to move forward with development in mid-2021.
If a decision to move forward is reached, Lagarde says she expects it to kick off a development phase that will last years.
“We need to make sure that we do it right. We owe it to the Europeans… The whole process – let’s be realistic about it – will in my view take another four years, maybe a little more.”
The ECB plans to release an analysis of its public consultation process on the potential launch of a central bank digital currency (CBDC), which will then be reviewed by European Parliament.
The next decision, on whether to roll out a digital currency, will be made six months to a year after that.
“It’s a technical endeavor as well as a fundamental change. We need to make sure that we’re not going to break any system, but enhance the system.”
Lagarde says cash is not going anywhere, even after the launch of a digital euro, but she notes that consumer buying habits clearly changed due to the pandemic.
“The way which they’ve changed the way they buy, the way they order, get their food, the way they pay. It is moving in a digital dimension, which we should not be afraid of.”
Globally, several central banks are developing CBDCs, but only the Bahamas has actually launched a digital national currency, in October, 2020. Called the Sand Dollar, it is backed 1:1 to the Bahamian dollar (BSD), which, in turn, is pegged to the U.S. dollar.
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