European Central Bank joins the race to launch the world’s first CBDC

European Central Bank joins the race to launch the world’s first CBDC
Written by:
Ali Raza
March 11, 2020
  • European Central Bank is considering the development of its own cryptocurrency, according to its president, Christine Lagarde.
  • Lagarde stated that the bank has created a professional task force, charged with researching the coins and calculating the cost and impact of ECB's CBDC.
  • She also said that the bank does not wish to be left behind, which is why it is considering joining the current trend.

Ever since its conception, the world of cryptocurrencies was hoping to see the day when institutions will start joining in and help it reach mainstream adoption. While this is still not happening for Bitcoin, the world does seem to be ready to give digital money a chance, only under its own terms.

It all likely started with the last year’s announcement of Facebook’s Libra, which prompted numerous countries’ authorities to become more active in the crypto space. While regulators are working harder than ever on trying to regulate the space, central banks of numerous countries took a different approach, and they started developing their own cryptos, known as CBDCs (Central Bank Digital Currencies).

The initiative started with China, and then it spread to Sweden, Bahamas, Russia, and numerous other countries. Now, even the EU’s central bank is considering the launch of its own coin, according to its president, Christine Lagarde.

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ECB joins the crypto race

Lagarde recently admitted that the world is changing and that the ECB needs to adjust to this change. She spoke about a number of financial topics in a recent interview, including the potential for ECB to launch its own CBDC. She did not say that the project is underway, but she did admit that the ECB does not wish to be left behind.

Quite the opposite, as the bank would want to take a more active role in the field, and potentially become one of the leaders of the crypto sector. For now, however, the bank will continue to assess the potential costs and implications of developing its own coin, but it did make a move by establishing an expert task force that is researching the so-called digital euro.

However, she also pointed out that the idea of CBDCs issued by the banks should not discourage nor crowd out the private market-led solutions, and prevent the development of efficient and fast retail payments in the euro area. However, not everyone shares that sentiment, as German Central Bank’s President, Jens Weidmann, believed that central banks need to do all in their power to minimize the need for cryptos from the private sector.