The European Central Bank (ECB) and the United States are seriously analyzing issuing central bank digital currencies (CBDCs). Two of the largest economies in the world are analyzing the costs and benefits of a digital currency. While the US is still analysing this possibility, the EU could make a decision as soon as in January 2021.
Will the EU and the US Launch Digital Currencies?
In a recent event held by the European Central Bank (ECB), the president of the institution, Christine Lagarde, informed that a decision to launch a digital euro would be made in January 2021. However, Lagarde emphasized that the ECB is not ‘racing to be the first’ issuing a CBDC.
Christine Lagarde said about it:
“At that point in time, we will make the decision as to whether or not we go forward with the digital euro. This is a decision that will be taken collectively.”
The ECB is analysing different issues, including users’ privacy, anti-money laundering and terrorism financing. Lagarde has also compared China’s digital yuan and Facebook’s libra and their decision to launch digital currencies. She mentioned that the development of these currencies needs several years of development.
“This is a project that will probably take us two, three, four years before it is launched,” she stated.
Jerome Powell, the Chair of the U.S. Federal Reserve (FED), said that they are committed to evaluating the costs and benefits of a digital currency. This is making reference to a digital US dollar.
The United States seems to be a step behind the EU in terms of issuing its own CBDCs. This was not the first time that the US FED mentions their intention to work on a digital dollar. According to the Federal Reserve Board Governor, Lael Brainard, it is important for the FED to be at the forefront of research and policy development in terms of digital currencies.
There are several countries investigating the implementation of central bank digital currencies. Not all the initiatives are coming for developed countries. Emerging economies are also researching how CBDCs could help implement monetary policies. Some of the countries working on these initiatives include Uruguay, Canada, Ukraine, and the United Kingdom, among others.
Although none of them has yet issued central bank digital currencies, research on the matter are being conducted. There is no country in the world to successfully issue a Central Bank Digital Currency.