“Bomb”: Definitive abolition of the euro – It’s the new currency – What Lagarde revealed

euro: A revelation that will cause debate and provoke reactions, as Christine Lagarde did, the euro will be in the near future… only digital!

In an interview, the head of the ECB reveals that “the creation of a digital euro will be decided next October”.

Late last month, the European Union introduced new cash payment limits of 7,000 euros (US$7,645). The cap is lower in some EU member states, such as €1,000 in France and Italy.

Moreover, the Europeans have recently decided to impose a cap of 1,000 euros on cryptocurrency transactions in the event of customer anonymity.

If Lagarde’s revelations turn out to be true, the cash habit will be further reduced as the euro zone moves to an all-digital system.

For his part, Lagarde argues that this decision will limit the European Union’s dependence “on currencies of hostile countries or currencies that are activated by a private company”.

He also referred to the violent riots in France a decade ago, which he said were “financed by small anonymous credit cards”.

He pointed out that while the digital euro may not be able to limit this small-scale financing (300-400 euros), he argues that traditional money has often financed terrorism, which justifies additional checks by the ECB. .

ECB boss didn’t say CBDC will outperform traditional payment systems, but TDR analysts say it will be a closed loop, with transactions going through the Bank’s ‘books’ Central European.

Euro: how to spot counterfeit banknotes

A big problem is counterfeit banknotes, which have flooded the market.

Around 376,000 counterfeit euro banknotes were withdrawn from circulation in 2022.

The risk of receiving a counterfeit banknote is very low, as the number of counterfeit banknotes remains very low compared to the number of genuine euro banknotes in circulation.

In 2022, 13 counterfeits were detected for 1 million genuine euro banknotes in circulation. This is the second lowest ratio since the introduction of euro banknotes.

Despite the extremely low percentage, based on an announcement from the ECB, the number of counterfeit euro banknotes increased by 8.4% compared to 2021, when the percentage of counterfeit banknotes was at its lowest level since the introduction of the euro.

This increase also reflects the resumption of economic activity in 2022 after the lifting of most of the restrictive measures imposed due to the coronavirus (COVID-19).

The €20 and €50 notes continue to record the highest counterfeit rates.

Together, these two denominations accounted for just under two-thirds of all counterfeit notes.

96.6% of counterfeits were detected in euro area countries, while 2.7% were detected in non-euro area EU Member States and 0.7% elsewhere in the world.

As noted, most counterfeit notes are easy to spot because they lack security features or the counterfeits are of very poor quality. There is no reason to worry about counterfeits, but we must be vigilant.

The authenticity of banknotes can easily be checked by the three-check method (“tactile check, visual check and angle check”) described on the website dedicated to security signs and on the websites of the national central banks of the eurozone .

The Eurosystem helps fund managers ensure that successfully tested banknote handling and processing machines can reliably detect and remove counterfeit banknotes from circulation.

According to the ECB, the use of counterfeit banknotes for payment purposes is a criminal offense liable to prosecution.

If you suspect that you have received a counterfeit note, you should compare it directly with a note that has been proven to be genuine.

If your suspicions turn out to be justified, you must notify the police or – depending on national regulations – the competent national central bank or your commercial bank.

The Eurosystem actively supports law enforcement authorities in their fight against counterfeiting and money laundering.

Euro: Why are coins printed?

At the same time, as The Economist wrote, central banks have tried to offer several explanations for this paradoxical phenomenon, but none of them were particularly satisfactory.

According to the European Central Bank (ECB), the value of euro card payments increased by 8.7% in 2020 alone, while the value of cash payments has been slowly and steadily declining for the past few decades. However, 70-80% of all transactions continue to be made in cash.

“The most likely answer – and the most worrying for the international financial system – is that the huge demand for cash is driven by the activity of criminal groups and illegal organizations, for whom cash is the safest mode of operation and financing, without the risk of being discovered by the authorities.

However, despite this, writes The Economist, global financial authorities are doing little to stop the problem and reform the treasury system.

Perhaps because they see it as less important than other major financial issues, and partly because the current economic and political balances do not make it possible to limit the issuance of paper money.

By minimizing emissions, the money in circulation can be said to increase because demand increases.

Not all major financial institutions have any particular restrictions on issuing cash, and indeed one of their goals is to ensure its availability.

Whenever a commercial bank deposits a certain amount of e-money with its state central bank and requests cash, the central bank returns cash equal to the value of the deposit.

Therefore, if central banks continue to circulate cash, it is because there are more and more entities asking for it. The problem is that it’s hard to understand why it’s being asked for, given that the use of cash to pay for goods and services is becoming less common.