The imminent arrival of IMF managing director Christine Lagarde as the new president of the European Central Bank may harbour a greater role for central bank-backed digital currencies in managing the retreat from cash in developed economies.
Nominated as the ECB's new president, former lawyer Lagarde has been outspoken on sensitive policy areas such as cryptocurrencies and Big Tech in her position at the IMF.
In a speech given at the Singapore Fintech Festival last year, Lagarde argued that a CBDC could satisfy public policy goals, such as financial inclusion, security and consumer protection and enable privacy in payments.
Rather than focusing on the downsides of financial integrity and stability, Lagarde urged policy makers to show more creativity in their thinking.
She has also extolled the virtues of virtual currencies as an alternative to pounds and dollars, all the while calling for a co-ordinated international response to remove the criminal “pollution” from the crypto-assets ecosystem.
More recently Lagarde has set her sights on Big Tech, contending that the arrival of companies like Amazon, Apple, and Google in financial markets could lead to systemic challenges to financial stability and efficiency.
At an address to the G20 Summit in Tokyo last month, Lagarde warned of a significant disruption to the financial landscape by Big Tech firms, who will likely use their enormous customer bases and deep pockets to offer financial products based on Big Data and artificial intelligence.
In a pointer to her thinking on the issue, Lagarde said: "These developments hold out the promise of accelerating inclusion and modernizing financial markets, but raise, in addition to privacy issues, competition and market concentration concerns, both of which could lead to vulnerabilities in the financial system."