The Chief Economist Philip Lane, Chief Economist of the European Central Bank (ECB), has repeated the need for a digital euro, emphasized its role in reducing risks of stablecoins and reducing dependence on American payment companies, Bloomberg News, reported on March 20.
Lane said at a conference in Cork, Ireland, that the Digital Euro Central Bank Digital Corrency (CBDC) is essential to guarantee the monetary and financial autonomy of Europe in the midst of increasing geopolitical fragmentation.
He added:
‘[Digital euro would] Limit the chance that Stabile currency from foreign currency will get a foothold as an exchange medium in the Euro area. “
Stablecoin rise
Lane emphasized the rapid rise in European interest in Stablecoins, a market that is mainly connected to the US dollar. He also pointed to the current dependence on Europe of payment providers established in the US, including Visa, Mastercard, PayPal, Apple and Google, as vulnerability in the financial infrastructure of the region.
In this context, Lane argued that a digital euro could tackle the fragmentation of Europe in retail payments and could serve as an unknown force for cooperation between banks and payment service providers.
He added:
“The case for a digital currency of the central bank is especially strong for a monetary union, especially in the context of a fragmented and external payment system.”
Push on a digital euro
The ECB has been developing the Digital Euro project since 2021 and is expected to take out a preparatory phase by October.
Earlier on March 20, ECB President Christine Lagarde told the legislators in Brussels that Europe should accelerate the progress in the retail trade and the wholesalers of the digital euro in order to strengthen financial sovereignty and reduce external vulnerabilities.
Lane’s comments in particular mark the third time this year that ECB officials insisted on the approval of a digital euro. On March 17, ECB member of the ECB François Villeroy Council warned the Galhau that the aggressive urge of President Donald Trump could introduce the adoption of crypto financial instability.
He insisted on European policy makers to strengthen regulatory measures to reduce potential risks. Villeroy de Galhau also expressed his concern that the US could create systemic risks that can be brought outside its limits by promoting crypto and non-bank financing without robust supervision.
ECB board member Piero Cipollone also called for an accelerated digital euro launch in response to Trump’s Executive Order who promoted supported dollar-supported Stablecoins on 24 January.
During a conference in Frankfurt, Cipollone said that Stablecoins pose a growing threat to traditional banking systems and financial intermediaries. They can hollow bank income and customer relationships.
He emphasized that a digital euro is needed to compensate for these developments and to maintain control over the monetary system.