Christine Lagarde: on the digital Euro now “we change gear”

Cryptocurrencies are still not big enough to pose a systemic risk to financial stability, Bank of England Deputy Governor Jon Cunliffe told CNBC: “The speculative boom in cryptocurrencies is very evident, but I don’t think it has crossed the line. financial stability risk “. The risk will not yet be big enough but, in the meantime, to anticipate this risk, everyone is moving. The ECB, with Christine Lagarde, confirmed that it is aware of 80 central banks that are currently examining digital currencies. Stating that it is “our duty to actually have digital currencies available that work for the benefit of customers”. Furthermore, the European Central Bank has just announced that it is starting to work intensively on the creation of the digital euro as more and more consumers are abandoning cash. From the ECB website the outlines of the project: “What happens now? We are starting to analyze what characteristics a digital euro might have. The investigation phase will start in October 2021 and will last at least two years. We will examine how a digital euro could be configured and how to distribute it to traders and citizens, but also its impact on the market and any necessary changes to European legislation. After the conclusion of the investigation phase, we will decide whether to start the development of a digital euro, and then eventually implement possible solutions to be tested, in collaboration with banks and companies that could provide the technology and payment services. From the experiments conducted so far it has emerged that there are no important technological limitations for the issuance of a digital euro and that it could be configured in various ways. The project is expected to last two years and the idea is to design a digital version of the common currency, used in the 19 members of the euro zone. However, the actual implementation of the central bank-backed currency could take another two years beyond the design and investigation phase. ”Christine Lagarde clarified further in a note:“ It’s been nine months since we released our report on the euro digital. In the meantime, we have carried out further analyzes, asked citizens and professionals for ideas, and conducted some experiments, with encouraging results. All this led us to decide to change gears and start the digital euro project. Our work aims to ensure that in the digital age, citizens and businesses continue to have access to the safest form of money, central bank money ”. In short, space must be occupied before private digital currencies or cryptocurrencies occupy it. The digital euro aims to complement the existing monetary system rather than replace physical money. Fabio Panetta, member of the executive committee of the ECB, removed all doubts in a post: “We are entering the era of digital currency. Private solutions for digital and online payments bring important benefits such as convenience, speed and efficiency. But they also carry risks in terms of privacy, security and accessibility. And they can be expensive for some users ”.