According to a virtual panel discussion hosted by the Bank for International Settlements (BIS) focused on central bank digital currencies (CBDCs), Christine Lagarde, President of the European Central Bank (ECB), emphasized the importance of a digital euro in preserving Europe’s payment autonomy.
Lagarde pointed out that payment methods like payment cards and apps are not necessarily European, highlighting the need for a resilient payment system that is not reliant on a single source.
Lagarde warned that relying on a single source for critical aspects of daily life can be detrimental, citing Russia’s decision to weaponize energy supply following its invasion of Ukraine as an example.
The digital euro project is still in its investigation phase, which began in mid-2021. In December 2022, the ECB released a second report on the progress made during this stage, and in January 2023, finance ministers of the eurozone countries pledged support for the initiative.
The European Commission is expected to propose the legal framework for the CBDC by the end of June, with the final decision on whether to proceed with the project expected later this year.
Lagarde highlighted the increasing trend of digital payments and the declining use of cash, noting that the digital euro is intended to be safe, sovereign, and available at the lowest possible cost.
However, she also acknowledged that a digital currency cannot provide the same level of privacy as paper banknotes and that cash will always be around.