Digital Euro: A Threat to Dollar?

Why new ECB leadership could be crypto-friendly?

OKEx
OKEx
Nov 15, 2019 · 4 min read

Overview

The global race of creating a central bank digital currency has been heating up after China’s latest plan of creating its version of “crypto-yuan”, aka Digitial Currency Electronic Payment (DCEP). The European Union has been catching up fast, with some part of the banking community on the continent has been whispering about their openness to having a digital euro. As Christine Lagarde takes the helm of the European Central Bank (ECB), the potential changes in the governing approach could bring a new impact to not just the financial world, but the crypto space too. Could we expect a digital euro in Lagarde’s era? What does that mean to the broader crypto market?

Door to Digital

Central bank digital currency, or CBDC, has become a hype among central bankers recently. That came after China is set to be the first major economy to digitalize its currency, although its releasing timeline remains largely unknown, more details of the project have been revealed. At the same time, China’s ambitions in blockchain seem like a wakeup call for many central bankers to rethink about digitalizing currency, and what opportunities could bring by doing so. The European Central Bank could be the next major policy-setting body to make a move.

“Central banks and supervisors need to ensure the safety of the financial sector, but also to be open to the opportunities provided by change. In the case of new technologies, including digital currencies.” — Christine Lagarde

Digital Euro: A Threat to King Dollar?

Although we are still extremely far away from a fully digitalized euro, yet, a blockchain-backed euro could threaten the leading reserve currency status of the dollar.

Conclusion

The European economy has been struggling under the global trade tensions, although Germany has marginally avoided a technical recession in the third quarter, economic development in the region is still fragile, and EURUSD has given up 3.8% of the value so far this year, underperformed other advanced economies. It’s interesting to see what the new ECB leadership will do to warrant the long-term growth of the region and strengthen the euro’s status as a global currency. Creating a digital currency is likely to be one of the cards.



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