Christine Lagarde, President of the European Central Bank (ECB), published an article on Monday mentioning the risks associated with the use of privately-owned cryptocurrencies. Lagarde criticised bitcoin and other stablecoins but spoke positively about the digital euro.
The official article published on 30 November in L’ENA hors les murs magazine stated that crypto users cannot rely on digital assets to maintain a stable value. Lagarde bashed the speculative and highly volatile nature of cryptocurrencies.
The ECB president also targeted global stablecoins backed by big technology firms, including Facebook-backed crypto project Libra. Lagarde added that the stablecoins present serious risks to the competitiveness and technological autonomy in the European region. She expressed concerns related to data privacy and the wrong use of personal information by large technology firms.
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“If widely adopted, stablecoins could threaten financial stability and monetary sovereignty. For instance, if the issuer cannot guarantee a fixed value or if they are perceived as being incapable of absorbing losses, a run could occur. Additionally, using stablecoins as a store of value could trigger a large shift of bank deposits to stablecoins, which may have an impact on banks’ operations and the transmission of monetary policy,” Lagarde mentioned in the article.
Praise for Digital Euro
Despite a tough stance against bitcoin and other crypto assets, the ECB president expressed optimism regarding the digital euro. She termed the digital version of the euro as a “unique” currency to meet evolving digital payment needs.” A properly designed digital euro would create synergies with the payments industry and enable the private sector to build new businesses based on digital euro-related services. A digital euro would also be an emblem of the ongoing process of European integration and ultimately help to unify Europe’s digital economies,” Lagarde added.
Finance Magnates earlier reported about the significant progress made by the ECB to launch a digital euro, in October the central bank published a report on the digital version of the euro and launched a public consultation. Lagarde said in November that the ECB will launch a digital euro in the next 2-4 years.