Digital Euro Not a Substitute For Fiat Currency, Says ECB President

Jyoti  |  Sep 22, 2020

The President of the European Central Bank (ECB), Christine Lagarde, on September 21, said that digital euros would not replace the fiat currencies in the region.

ECB Analyzing CBDC

During an online session of the Franco-German Parliamentary Assembly, Lagarde stated that although the bank has been analyzing the benefits, risks, and operational challenges related to the European CBDC, that does not mean fiat currency will lose its importance.

She mentioned that in this digital future also, the fiat currency would play its role.  

In the meeting, the ECB President stated that the people should not consider the digital euro to be a substitute for fiat currency, but a complement to it.

Lagarde, while talking about digital technologies benefits, further stated, “At European level, this should be complemented by accelerating progress towards the Digital Single Market to help deliver economies of scale for digital firms, while addressing key concerns around cybersecurity and data protection.”

ECB President Supports Digital Euro

As per the report, until September 10, the Eurosystem was not sure whether it should launch the digital euro or not. However, it announced the taskforce for analyzing the potential effects of CBDC on Europe.

Later, in order to get feedback from the public on CBDC’s issuance, the ECB released a report related to it.

Lagarde is an old supporter of the digital euro in the region. She believes that this country’s own CBDC could be a move towards digitization. 

In September 2019, while leading the International Monetary Fund, Lagarde announced that she would try her best to convince EU institutions to adapt to the changing financial environment by being open to crypto.

Recently, the ECB President also highlighted the unprecedented crisis that Europe has been facing at the time of this pandemic. 

She believes that presently, it is very tough for the European economy to come out of the crisis, and it all depends on how well the virus could be contained.

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