ECB President Says, Cryptocurrencies Are Highly Speculative Assets That Claim Their Fame As Currency
Christine Lagarde says, “we have to stand ready” for CBDC, which will be available side by side with paper currencies while calling for stablecoins to be regulated.
“Cryptos are not currencies. Full stop,” said Christine Lagarde, President of the European Central Bank (ECB).
In an interview with Bloomberg this week, when asked if she thinks cryptocurrencies are a plus for the global economy or if it’s too early to tell, Lagarde blasted cryptos, saying while they possibly can be, cryptocurrencies are not currencies.
“Cryptos are highly speculative assets that claim their fame as currency.”
She then talked about the need to distinguish between cryptos that are highly speculative, even suspicious occasionally, and have high intensity in terms of energy consumption.
Lagarde also talked about stablecoins during the interview, which she said are “beginning to proliferate.” The total market cap of stablecoins has now surpassed $124 billion, with USDT, USDC, and BUSD leading the market with their respective market share at 58.5%, 23.65%, and 10.27%. Stablecoins, she said,
“need to be regulated where there has to be an oversight that corresponds to the business that they are actually conducting irrespective of how they name themselves.”
Lagarde also noted that some big techs are also trying to promote stablecoins and push along the way, which she said are “a different animal.”
Tech giant Facebook first announced its stablecoin Diem in 2019 with a plan to be backed by a wide mix of fiat currencies and government debt and instantly ran into regulatory scrutiny. Last month, David Marcus said they seek necessary regulatory clearances and have already secured approvals for its digital wallet Novi in nearly every state in the US.
Central banks are also “prompted” by the demand of customers to produce digital fiat money, “something that will make the central bank and central bank currencies fit for the century we're in,” she said.
This is why every central bank, including the ECB and the Federal Reserve, is looking into central bank digital currency (CBDC) so that instead of having banknotes and cash, “we can have exactly the same thing. But in a digital form.”
“So all of us are working on this and certainly always keen to push the CBDC issue on our agenda because I believe that we have to stand ready for that.”
When launched, they will be available side by side with paper currencies,
“because we want customers to have their preference. If they still want to hold those banknotes and cash, fine. And it should continue to be available in the long run.”