ECB chief: CBDC will bolster eurozone financial sovereignty

The digital euro will eliminate the risks of losing financial sovereignty in the euro area. This was stated by ECB President Christine Lagarde, The Block reports.

The emergence of IT giants in the payments market could increase the risk of market dominance and dependence on foreign payment technologies with consequences for Europe’s strategic autonomy, she explained.

In a similar vein, Thierry Breton, the European Commissioner for the Internal Market, said.

We cannot allow anyone other than us, Europeans, to say what will happen in our digital payments market. […] We lack a pan-European appropriate solution. If we do not create it, others will, he explained.

According to Lagarde, the issuance CBDC could mitigate these risks, bolster trust in the monetary system and foster innovation. The ECB president promised that the European Commission will soonwill present a legislative proposal concerning such a possibility.

US Deputy Treasury Secretary Nellie Liang said that, unlike the EU, Washington is not in a hurry to decide on a digital dollar.

In the near term, we do not believe that the introduction of a CBDC with high probability will alter the fundamental role of the underlying structural factors of currencies, she said.

In July 2021 the research phase of the digital eurobegan, which was expected to run until September 2023. It was envisaged that by that time the regulator would determine the advisability of issuing a CBDC.

The initiative to issue the digital euro originated in November 2019. In October 2020 the ECB published a comprehensive report on the topic.

In May 2022, Fabio Panetta, a member of the ECB’s Governing Council, allowed for the issuance of a CBDC by 2026 with an issuance cap of 1.5 trillion.

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