ECB Lagarde: COVID-19 pandemic has accelerated this trend towards digitalisation

[exstasie]

I think there's nothing groundbreaking here.  Everyone has long known that we've been on a path towards digitization.  It started decades ago when you could pay over the phone with a credit card.  It has naturally accelerated as the internet has made electronic communications cheap and easy.  I don't think those portends well for crypto necessarily.  USD and Euro-denominated digital transactions are not a weakness in need of crypto's solution.  Crypto doesn't really do anything better there, so there's no reason to pick crypto over the mainstream digital alternative.  Crypto is likely to only continue to satisfy a niche market.

Maybe so, but what you're not addressing is accessibility or ubiquity or ease of use.

On a spectrum beginning from commodity barter and ending with digital payments, someone from the beginning of the spectrum (e.g. an African farmer) has no use for or interest in crypto. That is not true of someone on the other end of the spectrum (e.g. an American looking for a place to invest his Fed dollars) who needs to hedge the value of their assets and has the means to do so. In terms of access, CBDCs will at least be instantly creditable on centralized exchanges, and if built on blockchains, they could even be traded on DEXs.

I see the accelerated push towards CBDCs as a positive for crypto adoption for those reasons.

[bryant.coleman]

Now I don't want the central banks to use this opportunity, to push forward with their agenda of abolition of physical cash. Already high-denomination banknotes are being withdrawn in many of the countries, with the most popular excuse being their usage in money laundering and drug trafficking. I don't have any issues with digital payments as such, but when the authorities use it for surveillance of ordinary people, I get uncomfortable.

[Wexnident]

I know that it sounds very positive, but it also accelerated the growth on governments creating their own crypto, the so called CBDC (Central Bank Digital Currency) as well. Of course, digital payments doesn't mean crypto adoption in general as well.

What do you think of her speech though? Did we really see growth in recent months?

It naturally would show growth and adoption, Covid literally limited the ways most people can transact with each other, and a lot of e-commerce sites or people who sell stuff online started doing businesses that accept digital payments, which made it even more obvious that digital payments are rising right now. And what so if it accelerated the development of CBDC? It's a welcome development, especially if it'd move us towards a cashless society, which honestly should have been a thing already as early as 2015 or maybe much earlier.

[Yatsan]

The current situation which is the covid-19 pandemic have put a trigger into the fast pace of the community moving forward into digitalization for the fact that even the WHO and different government of various countries around the world have advice and suggested to use cashless transactions for it is said that the potential spread of the deadly virus which up until now still do not have cure can be possible to be transferred using physical contact by exchanging fiat / paper money. The threat on health and the fear of the people to get infected have really accelerated the massive shifting of many people from physical money to digital ones for it is the most safe way on doing transactions added by the fact that by this pandemic, people tend to stay indoors using internet and modern technologies which is the platform for digitalization to come in place. We are already facing the digital age ever since. It is just that the latest situation makes the acceleration of getting digital occur.

[Febo]

Most central banks will create or co-create with other central banks their own stable coins. There is no doubt about it. Problem is that people will not use them that much. Not in a long term.

What do you think they will be using as collateral, if you are saying they will be using a floating currency, which currency they will be using and if an asset like gold is used do you think they will be having the reserve to hold that much gold.

A currency dont need any collateral. They will not use gold. But a stable coin they will create alone or with other central banks.

[Argoo]

I know that it sounds very positive, but it also accelerated the growth on governments creating their own crypto, the so called CBDC (Central Bank Digital Currency) as well. Of course, digital payments doesn't mean crypto adoption in general as well.

Most central banks will create or co-create with other central banks their own stable coins. There is no doubt about it. Problem is that people will not use them that much. Not in a long term.

The coronavirus pandemic has indeed significantly accelerated the transition to non-cash payment methods, including digital payment methods. Paper money was recognized as a possible carrier of the coronavirus and this forced states to look for an urgent alternative to paper money. While this will generate some general interest in the use of a decentralized cryptocurrency, states will definitely move towards using their own central bank stablecoins. Most likely, the majority of citizens will also prefer stablecoins of states as a means of payment.
 Cryptocurrency is still more used as a speculative instrument, rather than a means of payment due to the still low liquidity. However, in the future, everything will definitely change.

[jostorres]

Yes you’re right that digital payments does not only refer to Bitcoin, we are aware that there are other digital/online payment methods, and adoption means that people are also embracing those other payment methods and not just about Bitcoin. Central bank digital currency is the next trend, although I am not really sure if they are going to be successful, countries that have tried creating cryptocurrencies all never became a success.

Moreover I don’t think that cryptocurrency is something that the government should be look into, they should just focus on other things, we already have Bitcoin. And why I am saying the government should forget about cryptocurrency is because there is already online banking, creating a CBDC won’t make sense since it’s still going to be the same with online banking.

[Lucius]

AFAIK, the EU has been working on the design of a CBDC for years - probably years before China started doing so. Maybe all they need left is the green light from other states before they push their currency to the mainstream, but China is always much quicker with a lot of things

The EU can work on something for the last 50 years, but what is it worth when they need at least so much more to implement it ... But when it comes to efficiency and the implementation of certain solutions, then the EU lags far behind China - which is why Lagarde speaks of foreign providers dominating the digital payment market.

Some countries like France are testing CBDC, but this is still far from what China shows, because 5 months ago you could see the official Chinese wallet with some interesting information which suggest that the whole thing has gone into very serious testing in real life, of course with a limited number of people.

[Vishnu.Reang]

The EU can work on something for the last 50 years, but what is it worth when they need at least so much more to implement it ... But when it comes to efficiency and the implementation of certain solutions, then the EU lags far behind China - which is why Lagarde speaks of foreign providers dominating the digital payment market.

One of the issues with European Payment gateways is the strict regulation that is in place. The Chinese companies are given a certain degree of freedom and this puts them at an advantage compared to the European and American competitors. As such I don't think that in efficiency the European gateways are poor when compared to China. The real issue is not the efficiency, but support from the government.

[Lucius]

Vishnu.Reang, we cannot compare modern Western democracy and the Communist Party of China. I have had the misfortune to live in such a society part of my life and in such a system the government never asks people for anything, and all those who do not want to carry out orders are imprisoned or killed. China's efficiency does not come from giving someone the freedom to do something, but from the whole country behaving like a Borg (one consciousness in one mind) carrying out orders without discussion.

If we look at the EU and its governance system, it is clear why it is so inefficient and slow - because there are 27 countries that make decisions together in the EU parliament, and then a good part of the decisions must be confirmed in national parliaments - which then oppose EU decisions for various reasons. China running their CBDC is the decision of one country, as well as anything else at their national level - while something like this will never be possible in the EU - too many separate interests and different opinions.

[Vishnu.Reang]

Vishnu.Reang, we cannot compare modern Western democracy and the Communist Party of China. I have had the misfortune to live in such a society part of my life and in such a system the government never asks people for anything, and all those who do not want to carry out orders are imprisoned or killed. China's efficiency does not come from giving someone the freedom to do something, but from the whole country behaving like a Borg (one consciousness in one mind) carrying out orders without discussion.

If we look at the EU and its governance system, it is clear why it is so inefficient and slow - because there are 27 countries that make decisions together in the EU parliament, and then a good part of the decisions must be confirmed in national parliaments - which then oppose EU decisions for various reasons. China running their CBDC is the decision of one country, as well as anything else at their national level - while something like this will never be possible in the EU - too many separate interests and different opinions.

I guess you misunderstood me. I am not a fan of dictatorships. A lot of human rights violations are going on in China, and I am of the opinion that this needs to be stopped. Unfortunately, the Western media refuses to highlight these abuses, with the exception of what is happening to the Uighurs. The global media remains blind to those abuses faced by the ordinary Chinese (who are not Uighurs).

But some of the positive aspects can't be overlooked. During the past 2-3 decades, China has succeeded in removing the red tape and bureaucracy to a large extent. Also, they have removed unwanted regulations, which were harming business operations. The EU is yet to take any such measure. And in countries such as Italy and France, businessmen face a lot of red tape.

[SquallLeonhart]

I believe there was already a speeding movement towards digitalization but I just feel like it wasn't this big, obviously it got faster and faster because of the pandemic but we just reached the destination faster and not went to another path. Even without the pandemic, we would basically all be here at this moment eventually, we just got here faster due to the pandemic.

This means, be ready to lose jobs that requires you to be on the site, you are going to see a lot more stuff handled at home and not really go to work and many stuff purchased via online shops and not really go there yourself, people are not really upset that they are at home, they are upset that they are forced to be, but they are quite happy at their home, which means digitalization has to be done eventually for everything.

[el kaka22]

Even political stuff change with this online presence right now you realize that right? For everyone who didn't watch it, I do recommend everyone to watch "the big hack" on netflix, it is a movie about how there was a company called Cambridge analytica and they spent 1 million dollars per day (obviously paid by the party) to help Trump get elected on online ads.

From facebook to  twitter to instagram to many other online platforms they have spent millions of dollars to get him elected.

The way they did was to figure out who cares about what and to make anti-Hillary and pro-trump messages and ads about that specific subject to make you hate her and love him, obviously this doesn't work on everyone but even if they could make sure that few thousand didn't vote for Hillary, that changed a lot.

Online world is ruthless and it will continue to shape our future.

[CODE200]

Ever since, even without this covid-19 pandemic, we are already getting into the phase of digitalization for we are now entering into the world of advance and well modernized age of technology that have given a lot of break through compared to the past years that technology have been developed. It is just that because of the current situation we are all into, the pace of adapting or getting into digitalization have been accelerated all due because the government and the health related departments have advised people to stay indoors and as much as possible is to avoid physical contact for it is said that the deadly virus can be transferred through physical contact.

With such threat on one's life, people are finding ways on how they can somehow continue life on a daily basis without or lessening the possibility of having physical contact and that is to get digitalized. Works and transactions are now being done digitally through various gadgets that people do have. Tech companies are surely be the one benefiting on this for the new normal is giving out opportunities that can be accessed on a digital manner. No wonder how there is a fast pace on how people shift from traditional getting into digital because of the health threat brought by this pandemic.

[Quidat]

I know that it sounds very positive, but it also accelerated the growth on governments creating their own crypto, the so called CBDC (Central Bank Digital Currency) as well. Of course, digital payments doesn't mean crypto adoption in general as well.

What do you think of her speech though? Did we really see growth in recent months?

Not a surprise if government would consider out on making their own coin (it cant be called crypto since its not decentralized) if this pandemic would still continue since the new normal now is particularly pertaining on making digital transactions due to fiat notes can also be a medium of the said virus but excluding the pandemic situation then going digital is already considered for a particular time.
We had already these online digital transactions using up those traditional cards and online banking transactions. Making this new government coin is no different from those things.
Accelerating the trend towards digitaliization? We are actually heading there even this pandemic didnt happen.

[goldade]

Although the journey to digitalization has started since the beginning of time, the COVID-19 pandemic has given a surge of acceleration to it.
The pandemic caused the need for people to make purchases online as there is restrictions to movement. It caused people to pay their bills online all in a bid to minimize movement.
Although, the primary aim is to eradicate the virus, it has also made quite a lot of people, especially the ignorant, realize that that there is digital world along with the mainstream world.
Just like OP said, although these payments were not all made with crypto, it is only a matter of time before people also know of the digital currency and begin to adopt it

[panganib999]

Well, that was kinda true. This covid-19 pandemic have really boosted up the people to get into digitalisation because of the current threat that concerns health on which according to health professionals as well as the WHO (World Health Organization) have advised that as much as possible is to avoid getting in touch or having physical interaction which concludes to get into getting digital to avoid such. Although digitalisation have already started years ago, it was still surprising that the engagement on getting digitalised have been accelerated because of this pandemic. Almost all traditional daily routines have gone through digital starting of with transactions, work from home and even education or the academic year became digital. This was all become possible for certain health protocols have restricted people to go outside and find alternative ways to still continue their lives and getting into digital makes it more possible to make happen.

[jrrsparkles]

IMO governments are not going to give much importance for creating their own centralized blockchain based token for atleast the next couple of years because already the circulation of money all around the world hindered a lot and if there is another big stroke in the economy system will out lot of government into the under developed stage for sure.

[Vishnu.Reang]

IMO governments are not going to give much importance for creating their own centralized blockchain based token for atleast the next couple of years because already the circulation of money all around the world hindered a lot and if there is another big stroke in the economy system will out lot of government into the under developed stage for sure.

How different will be these central bank tokens from already circulating stablecoins such as USDT, USDC and BUSD? They will have the same exchange rate as that of the corresponding fiat currency and the only difference will be that the central bank tokens will be 100% centralized. At least in the case of BUSD and USDT, the chances of government confiscation is low.

[jrrsparkles]

IMO governments are not going to give much importance for creating their own centralized blockchain based token for atleast the next couple of years because already the circulation of money all around the world hindered a lot and if there is another big stroke in the economy system will out lot of government into the under developed stage for sure.

How different will be these central bank tokens from already circulating stablecoins such as USDT, USDC and BUSD? They will have the same exchange rate as that of the corresponding fiat currency and the only difference will be that the central bank tokens will be 100% centralized. At least in the case of BUSD and USDT, the chances of government confiscation is low.

CBDCs will be owned by your government so they have complete control over all the transaction and it is limited to your borders alone but a stable coin like USDT or USDC have no border limits so you can send or receive anywhere you want but the complete control of your funds is in the hands of some company.