European Central Bank President Christine Lagarde said she believes the region’s monetary authority will move to launch a digital version of the euro in the next two to four years.
“We might well go in that direction,” Lagarde said Thursday on a virtual panel with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. “My hunch is that it will come.”
ECB officials have previously disclosed they are conducting research into a central bank digital currency, and Bank of Finland Governor Olli Rehn told Reuters last month he believes a digital euro is “very likely” to debut in the next decade.
Lagarde said a digital euro would take extensive time to develop, including not just the underlying technology but anti-money-laundering controls and prevention of terrorism financing. She noted that China’s central bank has been working on a digital version of its yuan for several years.
“If it is going to facilitate cross-border payments, we should explore it,” Lagarde said Thursday, though she does not expect paper money to disappear.
“A digital euro will not be a substitute for cash,” she said. “It will be a complement.”
For his part, Fed Chair Powell reiterated the U.S. central bank is evaluating the merits of a digital dollar, but has not yet made a decision on creating a digital currency. The Fed is looking into the merits and possible technical solutions to a digital dollar, though it does not appear likely to launch one within the next few years.
The Bank of England’s governor, meanwhile, said there may be privacy concerns for privately issued stablecoins, and CBDCs may be the “answer to that bar.” Bailey has said in the past he would like to see a global framework for regulating stablecoins.