A major German digital security firm that is a significant player in the electronic payments sector on Tuesday (Sept. 15) has backed a call by the head of the European Central Bank (ECB) for quick exploration into creating an official European Union digital currency.
Giesecke+Devrient Chairman and Group CEO Ralf Wintergast said in a prepared statement: "We welcome and fully support (Christine) Lagarde’s approach to a digital euro. At the same time, we would now like to see much faster action at [the] European level. In the digital world, speed is the most important factor. That is why we must now focus on a digital currency together before it is too late. There is no doubt that we have the technological know-how and the innovative strength to preserve our fiscal sovereignty."
Lagarde laid out the rationale for quick action on a digital euro in a Sept. 10 speech delivered during a conference on digital banking and payments hosted by the Deutsche Bundesbank from Frankfurt, Germany.
"In the digital age, innovation in payments enables us to interact in easier, faster and cheaper ways. But this innovation also comes in new forms – based on private payment systems or using digital currencies – which create new risks and pose important questions of sovereignty," Lagarde said, according to an official transcript posted on the ECB's website.
Lagarde said central banks need to offer and oversee digital currencies in part because consumers in areas such as Europe have shown they prefer them to cash. The rapidly evolving sector is already dominated by a relatively small number of private companies, and countries need to control currencies to retain sovereignty, she noted.
"These issues go to the very heart of the ECB’s mandate. They raise new questions about whether the ECB should drive initiatives to integrate retail payments in Europe, and even whether it should issue a digital euro," Lagarde said. "We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well."
She added: "Here at the ECB, it is our duty to ensure that people have access to riskless, low-cost means of payment, as well as state-of-the-art payment services that reflect our changing economy.
"And second, given our size and influence, in Europe we have a responsibility to ensure that our citizens have choice and cannot be excluded from the payments ecosystem due to the unilateral actions of others,” she continued. “We need to ensure that European payments are fit for a global digital economy so that, in the face of changing risks, we can preserve the autonomy of European payments."
Giesecke+Devrient said in the company's prepared statement: "Monetary sovereignty is both a key asset and an important prerequisite for the prosperity, stability, independence and welfare state of European countries. However, it is increasingly under threat from digital currencies that are uncontrollable as well as ungovernable."
The statement continued: "A separate, central bank-controlled digital currency will give high priority to important social aspects such as risk assessment, data protection, separation of powers and democratic control. It will also define the European regulatory framework for foreign competitive solutions."