Coronavirus has fast-tracked digital currency adoption: ECB

European residents are increasingly becoming more comfortable with digital and contactless payments, as the ongoing pandemic has made it the safest way to conduct transactions

Christine Lagarde has revealed that an increasing number of people in the EU are becoming more comfortable with digital and contactless payments. She is the former International Monetary Foundation (IMF) chief and the current president of the European Central Bank (ECB).

According to the ECB boss, the current pandemic has seen consumers adopt digital payments in an unprecedented manner, with the trend continuing to accelerate. Lagarde made this revelation while speaking yesterday at the Deutsche Bundesbank online conference on banking and payments in the digital world.

The ECB president also revealed that a panel of euro-zone central bank officials would reveal their verdict on a European central bank digital currency (CBDC) soon. “The coronavirus (COVID-19) pandemic has accelerated this trend towards digitalisation. E-commerce, which has grown steadily in recent years, increased by almost a fifth in terms of volume of sales between February and June 2020, while in-store sales declined,” Lagarde said.

According to the ECB president, e-commerce sales went up by nearly 20% between February and June despite the 1.2% decline experienced in retail sales in the region. She further added that the volume of online payments had seen a double-digit growth rate since the pandemic broke out earlier this year.

The ECB isn’t the only financial institution to arrive at this conclusion. Last month, Singapore’s DBS Bank mentioned that the ongoing Coronavirus pandemic had accelerated the move towards a society that depends less on cash and more on digital payments.

ECB to move towards digitisation

Lagarde admitted that Europe has fallen behind in terms of dominating payments on a global scale. “The lack of payment integration in Europe means that foreign providers have taken the lead,” she added. As such, Lagarde supports the European apex bank developing a CBDC to ease the transition towards digitisation. She also wants to see the region adopt faster and cheaper cross-border payments.

Lagarde has always been committed to ensuring that financial institutions in the EU adapt to the changing financial environment by becoming friendlier to cryptocurrencies. She stated that the EU had not yet decided on whether to develop a digital euro as they are currently exploring the risks, benefits and operational challenges of launching a CBDC.

Finally, the ECB president revealed that the results of the panel tasked with studying the potential effects of a digital euro will be announced in the coming weeks.