European Central Bank President Christine Lagarde said she believes the regionâ€™s monetary authority will move to launch a digital version of the euro in the next two to four years.
â€œWe might well go in that direction,â€ Lagarde said Thursday on a virtual panel with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. â€œMy hunch is that it will come.â€
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 â€œvery likelyâ€ to debut in the next decade.
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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 Chinaâ€™s central bank has been working on a digital version of its yuan for several years.
As reported by CoinDesk, China is already conducting trials of the digital yuan.
â€œIf it is going to facilitate cross-border payments, we should explore it,â€ Lagarde said Thursday, though she does not expect paper money to disappear.
â€œA digital euro will not be a substitute for cash,â€ she said. â€œIt will be a complement.â€
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.
Read more: Debate Rages on Whether a Digital Dollar Will Unleash Inflation
The Bank of Englandâ€™s governor, meanwhile, said there may be privacy concerns for privately issued stablecoins, and CBDCs may be the â€œanswer to that bar.â€ Bailey has said in the past he would like to see a global framework for regulating stablecoins.