Digital Euro Key for European Payment Autonomy, ECB President Lagarde Says

The digital euro has an important role in preserving the payment autonomy of Europe, the head of the eurozone’s monetary authority emphasized. The new currency, which is still under development, is meant to be sovereign and safe, cheap and widely available, Christine Lagarde assured during a discussion devoted to central bank digital currencies.

A digital euro has a key role to play in safeguarding Europe’s payment autonomy, President of European Central Bank (ECB) Christine Lagarde was quoted as saying during a virtual panel devoted to central bank digital currencies (CBDCs), which was hosted by the Bank for International Settlements (BIS).

“When you look at your wallet and you look at your telephone and see the applications that you use for payments or the cards that you use for payment, you very soon realize that those means of payments are not necessarily European,” Lagarde elaborated, quoted by Bloomberg.

During the discussion held and recorded earlier in March but posted on Tuesday, the top ECB executive warned against relying on a single source for critical aspects of daily life, referring to Russia’s decision to weaponize energy supply following its invasion of Ukraine as an example, and adding:

So we just have to be careful. Some people will call it sovereign autonomy, I prefer to call it resilience because that’s really what it is.

The project to issue a digital version of the euro is still in its investigation phase which started in mid-2021. In December 2022, the ECB released a second report on the advance made during this stage, and in January, 2023, the finance ministers of the eurozone countries pledged support for the initiative.

In November, last year, Lagarde said Brussels will soon put out draft legislation for the CBDC. The European Commission is expected to propose the legal framework by the end of June. The final decision on whether to proceed to the realization of the project should come later this year.

Christine Lagarde highlighted the trend of increasing digital payments while the use of cash is shrinking. She pointed out that the digital euro is intended to be safe, sovereign and available “at the cheapest possible cost.”

However, she also admitted that it will not provide the same privacy as paper banknotes. “A digital currency will never be as anonymous as cash,” she acknowledged, adding that this is why “cash will always be around.”

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