ECB is falling behind its competitors in the CBDC space

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Sep 11, 2020
  • According to ECB President, Christine Lagarde, the ECB seems to be falling behind its CBDC competitors.
  • A special task force for studying CBDC is getting ready to reveal the results of its study soon, she said.
  • The findings might be crucial in making a decision on whether to make the coin or not.

The European Central Bank (ECB) recently revealed plans to study the cryptocurrency sector, and particularly the possibility of launching a CBDC. To that extent, it created a panel tasked with exploring the central bank digital currency some time ago. Now, it is time for the researchers to present their findings.

The strong competition of the CBDC sector

According to the ECB President, Christine Lagarde, the results of the research will be revealed soon, after which there will be a public consultation. Lagarde revealed this during her speech at the Deutsche Bundesbank’s recent conference, which revolved around payments and banking in the crypto industry.

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However, Lagarde also noted that there is strong competition in the CBDC world, where everyone aims to dominate the euro-zone retail sector.

Lagarde continued by saying that the creation of the digital euro would be the cutting edge of innovation. However, there is a noticeable lack of payment integration across Europe. This indicates that foreign providers may have already taken the lead in the region, which, in turn, means that the European Central Bank is falling behind.

Major considerations regarding digital euro

The ECB’s digital euro task force was set up earlier this year. In May, one of the ECB executive board members revealed that the task force is focusing on a retail CBDC, rather than a wholesale currency. This was also confirmed during Lagarde’s speech yesterday.

However, Lagarde also added that there is no reason to fear that a digital euro would push out the use of cash. It would be a complement to it, and not a substitute for it. They would simply coexist, and offer consumers the ability to choose.

There are other things to consider, such as risk management, which will play a big role in the way the coin — if it even gets designed — will look like and function. Also, the coin would need to be able to meet the public demand for digital payments, and not damage private payment solutions along the way.

So far, Europe has not made a decision whether it will introduce the coin. However, the findings might help make that decision once they arrive.

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