ECB President Christine Lagarde made it very clear during her Monday’s interview with a French business magazine, Challenges, that although she is in favor of developing a central bank digital currency (CBDC), she, in no way, wants to deter private entities from making strides in the development of private stablecoins.
The European Central Bank (ECB) Chief Lagarde has always openly supported the idea behind CBDCs. In December, she affirmed that the institution wants to be at the forefront of technological developments surrounding CBDCs. However, on Monday, she added that the bank does not want to discourage private companies from getting onboard.
ECB to step up its efforts to develop its own crypto, ECB President
The sheer concept of bringing CBDCs into force was to support the developments in and outside the sphere. We intend not to avert the growth and development of privately-held stablecoins. They are welcome, and so are other initiatives in the field that facilitate fast and seamless retail payments in the region, Lagarde clarified.
ECB President also reiterated that the bank wants to be actively involved in cryptocurrency developments. We do not wish to take a back seat in this, Lagarde continues, and the demand for cross-border payments and remittances continue to increase with financial institutions working round the clock to meet consumer needs, ECB is going to weigh up ups and downs in developing our own CBDC.
According to her, the biggest challenge in creating a CBDC is to accurately assess whether the general public is ready to make the shift from hard cash to crypto. People should be able to entirely rely upon the digital currency when the cash demand declines. Thus, CBDC will have some significant impact on the region’s monetary system as well as the transmission of the financial policy, she asserted.
ECB contradicts views of German Central Bank President
And while on the one hand Lagarde, who also happened to express concerns over Facebook’s private stablecoin project Libra that will attract a lot of media attention through Facebook, blocking other stablecoin developers from entering the race, has clarified that central bank initiatives must not deter private companies like Facebook to make advancements, on the other hand, German Central Bank President Jens Weidmann, had a contradictory opinion on the matter. Last week, he urged European banks to seek better and cheaper alternatives to Facebook Libra as CBDCs do not quite serve the purpose.
Featured Image by Flickr