• ECB President Christine Lagarde has highlighted the importance of a digital euro in preserving European payment autonomy.
• The digital euro is intended to be safe, sovereign and widely available at the cheapest cost possible.
• The European Commission is expected to propose a legal framework by the end of June, with a decision on whether or not to proceed with the project coming later this year.
European Payment Autonomy
ECB President Christine Lagarde has emphasized the important role of a digital euro in preserving Europe’s payment autonomy. During a discussion devoted to central bank digital currencies (CBDCs), Lagarde warned against relying on single sources for critical aspects of daily life, citing Russia’s weaponization of energy supplies after its invasion of Ukraine as an example.
Digital Euro Features
The digital euro is being developed with the intent that it will be sovereign and safe, cheap and widely available. Lagarde pointed out that when looking at wallets and apps used for payments or cards used for payment, they are not necessarily European. A digital currency will never provide the same privacy as paper banknotes, she acknowledged.
The project to issue a digital version of the euro is still under investigation which began in mid-2021. In December 2022, the ECB released a second report on progress made during this stage and in January 2023 eurozone finance ministers pledged support for the initiative. In November last year Lagarde said Brussels would soon put out draft legislation for CBDCs.
Legal Framework Proposal
The European Commission is expected to propose legal framework by end June 2021 and final decision on whether or not to proceed with project should come later this year. This framework will ensure that the digital currency remains safe, sovereign and widely available at cheapest cost possible while maintaining certain level of privacy similar paper banknotes offer.
In conclusion, ECB President Christine Lagarde has highlighted importance of introducing digital euro for preserving Europe’s payment autonomy while ensuring safety, sovereignty availability at lowest cost possible without compromising privacy offered by paper banknotes . EC’s proposed legal framework should provide clarity about proceeding with this project later this year .