The ECB discusses the issuance of a digital currency

According to Bloomberg, ECB policymakers will soon discuss the issuance of a central bank digital currency (CBDC) during the first meeting of the board under the chairmanship of Christine Lagarde. 

After stating its readiness to develop its own digital currency, if necessary, the ECB now seems to be taking a further step forward, albeit only at an exploratory level. 

Indeed, the policymakers of the European Central Bank will be meeting this week in Frankfurt and will discuss explicitly the possibility of launching a digital currency. 

According to Bloomberg, this meeting will take place before the official meeting: the members of the Board of Directors are expected to talk about it informally over dinner, the day before the political meeting chaired by the new governor. The source of this information is anonymous, and the ECB itself has refused to comment. 

Bloomberg also said that this could be a real change of direction for the ECB due to the presidency of Christine Lagarde, considered to be more open to new developments and more reforming than her predecessors. After all, Lagarde’s favourable position on digital currencies has been known for months: these technologies are considered to be innovative and should be taken into serious consideration. 

In fact, according to the new governor of the ECB, digital currencies could help to broaden the so-called financial inclusion, for example by allowing even those who do not have a bank account to have a digital wallet and could also help to increase the level of consumer protection. 

Obviously, in this specific case, they are not decentralised cryptocurrencies, but rather traditional centralised fiat currencies put into circulation in a new format probably based on a distributed ledger. Nevertheless, this de facto recognises that the underlying technology, derived from cryptocurrencies, has an interesting quality and level of technological innovation, to say the least. 

However, it is by no means clear whether the dinner will result in the ECB’s willingness to continue along this path, given that these are only the first steps towards discussing the usefulness and feasibility of the project. In any case, the intentions of the new governor suggest that the proposal will be seriously and thoroughly evaluated.