Digital Euro Will Provide Alternative to Cryptocurrency, Says ECB Chief
The president of the European Central Bank (ECB) Christine Lagarde has extolled the benefits of a digital currency for the regional body. Lagarde made these statements at the Franco-German Parliamentary Assembly on September 21.
Digital Euro to Co-exist with Fiat Currency
The European bank chief further confirmed that the digital euro would not replace the traditional fiat euro but would complement the currency thus clearing any doubts that the planned digital asset was meant to succeed the existing circulating euro.
She also believes that the launch of the digital euro would reduce the dependence of EU citizens on private crypto-assets like Bitcoin and Ethereum which would ensure that sovereign money remains the core tender for European payment systems.
Lagarde’s comments at the Franco-German parliamentary assembly further confirms the fears of regulators and governments across the world with the rapid growth of cryptocurrencies.
There is a fear that a popular and scalable cryptocurrency could reduce the authority that central banks currently have to control monetary policies. It would also cause a significant shift in the use of fiat currencies.
Cryptocurrencies Facing Challenges from Regulators
There has been a significant movement by governments across Europe to stop the growth of cryptocurrencies that have the potentials to generate massive appeal. Libra cryptocurrency chaired by Facebook has suffered several setbacks from regulators across Europe.
France’s finance minister was quoted as saying that Libra had the power to usurp the sovereign rights of nations to issue their own currencies. He also criticized the undemocratic control that Libra possesses. “I cannot countenance one of a sovereign state’s most powerful tools, monetary policy, falling under the remit of entities not subject to democratic control.”
Despite this, there have been plans to test run the development of a digital euro which European bank chiefs believe can be vital in the move towards digitalization. Lagarde has spoken positively about this and is a firm believer in adopting the financial environment to become more accepting of digital assets.
In August she revealed that the creation of digital euro would help the region to regain the lead on payment innovations by developing an integrated infrastructure to ensure seamless digital asset integration.
