The finance minister of Germany has called on European leaders to think and work over launching the central bank digital currency for the region. This is very important as private projects are making their place in the public, which is a very dangerous thing for central banks.
Focus on Digital Euro
As reported by Reuters, Olaf Scholz, hopes that Europe will make arrangements on an emergency basis to come up with a digital currency that will be used in the European region. Both Fintech companies and customers want a digital version in order to run businesses smoothly without any interruption. According to Scholz:
“On the digital euro, I think we should work very hard. It is nothing where we should wait and see. [We] should be able to decide at any time that now we should do something with a digital euro.”
The finance minister of Germany does not like the idea of private cryptocurrencies as they can pose a great threat to government authorities. When social giant Facebook launched its crypto project called Libra, he was the first one to oppose the idea of Libra. In order to counter private-based crypto projects, the government of Germany started to work on the blockchain technology in 2019.
In September, it was reported that the European Central Bank (ECB) would create a comprehensive report over central bank digital currency or digital euro. President of the European Central Bank, Christine Lagarde, also commented on the subject matter and agreed that digital currency is inevitable and the launch of digital euro will complement fiat currency rather than replacing it.
Private Cryptocurrency is Not Good
Lagarde also believes that a state currency should launch in order to curb private cryptocurrencies in the markets, which are not good for financial institutions working under the respective governments. Recently, the Bank for International Settlements stated in a research paper that state-based digital currencies would perform better than privately-issued stablecoins such as Libra. Libra was nearly stopped after the US lawmakers put a lot of burden on the project, and some founding members even left the project. Recently, Reuters reported that Libra Association will launch the US dollar-pegged stablecoin by the start of the next year.
Scholz is one of those European financial chiefs who are favoring the launch of the digital euro as soon as possible. Definitely, the European leaders will have to think about CBDC as some countries are showing promising results in the development of a CBDC.