Digital euro to break the link between ECB and other banks – Cristine Lagarde

  • The head of the ECB prefers to proceed with caution when it comes to digital assets.
  • The regulator is working on a supervision system for stablecoins.

The European Central Bank is working on digital currencies, but the launch of digital euro may be delayed due to systemic risks inherent to stablecoins. Such a message sent a new head of the European Central Bank Christine Lagarde.

She believes that the digital euro will change the transmission of monetary policy and affect the stability of the global financial system.

A stablecoin can break the central bank’s feedback with banks as they would no longer submit the reports. thus the regulator will be deprived of the ability to forecast and plan.

A central bank digital currency would allow citizens to use central bank money directly in their daily transactions. However, depending on its design, a central bank digital currency could pose risks. For instance, they could alter the way in which monetary policy is conducted and transmitted to the real economy. They could also carry implications for the functioning of the global financial system and its stability. The question of central bank digital currencies and their optimal design, therefore, warrants further analysis, – she said.

The head of the ECB proposed to conduct comprehensive tests of the banking system, by introducing blockchain in interbank transfers.

At the same time, Lagarde emphasized that the ECB was already cooperating with central banks and international bodies. The regulator also develops the supervision system for stablecoins that will reflect the peculiarities of new assets.

Earlier, the Finnish representative in the EU asked the ECB to consider the possibility of issuing its own digital currency.

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