Are we moving towards a cashless society?
It has been reported and indeed confirmed by the European Central Bank that policymakers are pushing ahead with the creation of a Central Bank Digital Currency (CBDC) or digital Euro. That’s ahead of a formal policy meeting today under new ECB head Christine Lagarde who has moved over from the IMF.
There is no expectation of an imminent decision.
Lagarde has previously spoken about the potential benefits that digital currencies can have on financial inclusion. Hence her priority could be towards a retail or consumer-focused Central Bank Digital Currency.
A year ago, while at the IMF she stated: “My message is that while the case for digital currency is not universal, we should investigate it further, seriously, carefully, and creatively.”
But since then the landscape has changed. Lagarde’s statement was before Facebook unveiled plans for Libra, which triggered significant attention from central banks across the world. Plus China has launched a consumer CBDC.
The move to private digital cash is also the trigger for Sweden’s interest in CBDC. In contrast, the ECB has previously argued that across Europe physical cash usage is still high.
Of course with the economies of Europe now suffering tax collection will become very important for each individual country and with no cash this will be a much easier task for our masters!