Christine Largade, the new president of the European Central Bank is hopeful that the bank will be able to identify its taskforce goals as regards a digital currency by the middle of 2020. According to her, the bank should be leading when it comes to digital currency.

She spoke at her first news conference that the bank needs to come up with its project objectives prior to the establishment of the technicalities.

She gave examples of such objectives: reduction in costs, attempting to cut out the middleman, and attempting to have inclusive finance without cost.

She mentioned the interest shown by some countries and should prompt the ECB to take steps; there is demand out there that the ECB needs to respond to.

However, there have been debates by the ECB concerning the merits and demerits of releasing its digital currency. A digital currency would offer holders a direct claim on the central bank as with banknotes but there will be no trouble attached to the need to store huge cash.

A digital currency offers a cheap and fast payment method. However, there will be humongous consequences for the financial system as well as the policy of the central bank.

One of such is the likelihood of depositors to switch into the ECB currency when financial crisis comes up, likely to exacerbate any bank run.

Contrariwise, a digital currency would permit the direct injection of liquidity into the economy by the ECB for boosting inflation, circumventing the financial sector and possibly bring about effective policy.

The debate concerning a CBDC has been on for years. It was the announcement of the proposed Libra by Facebook that increased the momentum.

However, regulators have been resisting the initiative due to concerns regarding the implications for money laundering and consumer protection.

Some days ago, EU finance ministers maintained the need to clearly address the risks that private digital currencies present before allowing them in the block.