ECB President Praises Stablecoins
Christine Lagarde, President of the European Central Bank (ECB) has issued a stern warning on Bitcoin and several altcoins.
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“I think we have to distinguish between cryptos that are those highly speculative, suspicious occasionally, and high intensity in terms of energy consumption assets, but they’re not a currency. Cryptos are not currencies, full stop. Cryptos are highly speculative assets that claim their fame as currency, possibly, but they’re not. They are not.”
"You have those stablecoins that are beginning to proliferate, which some big techs are trying to promote and push along the way, which are a different animal and need to be regulated, where there has to be oversight that corresponds to the business that they’re actually conducting, irrespective of how they name themselves,"
In a Sept. 1 interview with World Economic Forum founder and executive chair Klaus Schwab, Lagarde said cryptocurrencies should be considered as assets to be regulated and “supervised by asset regulators.” Under this definition, the ECB president claimed fiat-pegged digital currencies were also considered assets.
“Stablecoins are pretending to be a coin, but in fact it’s completely associated with an actual currency,” said Lagarde. “For instance, some of them are saying that they can be used for transactions, but the value will be exactly aligned to the dollar.”
She added that projects behind issuing any stablecoins should be required to fully back their assets with fiat:
“That needs to be checked, supervised, regulated so that consumers and users of those devices can actually be guaranteed against eventual misrepresentation. I think very recent history has shown that those reserve currencies were not always available and as liquid as they were intended to be.”
However, despite these seemingly strong opinions on digital assets, Lagarde made it clear that the ECB intended to respond to its customers. She has previously criticised stablecoins and cryptocurrencies, but didn't rule out the possibility the ECB would introduce a central bank digital currency.
“If customers prefer to use digital currencies rather than have banknotes and cash available, it should be available,”
Lagarde said.
“We should respond to that demand and have a solution that is European based, that is secure, that is available, and friendly terms that can be used as a means of payment.”
Government institutions across the world have accelerated their work on CBDC’s after Stablecoins substantial growth in popularity, driven by demand for price-stable assets in the fast growing DeFi and crypto capital markets. In July, the ECB's governing council said it would launch the investigation phase of a digital euro project lasting two years.
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