The European Central Bank (ECB) president, Christine Lagarde, has remarked that cryptocurrency has no value and should be duly regulated. Lagarde made the call as support for the ongoing move by regulators to control the crypto industry.
Instead, the ECB president has proposed an alternative, a digital Euro, as a safe bet against inflation.
A recently published Bloomberg article quoted Lagarde on a Dutch television show and stated that ordinary people are her biggest concern. They are more likely to plunge their life savings into crypto investments.
Lagarde also revealed that she is more worried about individuals who are not well informed about the risks associated with crypto trading. They will likely lose all they have and become disappointed.
Furthermore, the ECB president disclosed her understanding of digital currencies. They are not based on any known value, and they have no reserve assets to back them against market instability.
Crypto Assets Need Regulations
Lagarde is a well-known critic of cryptocurrency and has in the past made many scathing remarks about the industry over the past couple of years. She is unlikely to change her stance on cryptocurrency.
In contrast to the United States Treasury secretary Janet Yellen, who is seen as a supporter of digital assets. The Treasury secretary’s remarks following the executive order of President Joe Biden on cryptocurrency, where she is reported to have said the presidential directive would help promote innovation in the industry.
Lagarde further remarked she would only give her backing when a digital Euro or any central bank-approved digital is launched. According to her, an officially issued digital token differs from a decentralized digital currency.
Lagarde on CBDC
The European Central Bank president is indifferent to the significant adoption cryptocurrency has enjoyed and is not oblivious to the buzz it has generated among most people worldwide.
However, she still maintains that crypto, especially Bitcoin, is worthless in the financial space. She added that there is nothing to show for their worth compared to fiat.
Meanwhile, Lagarde admits that she has no say in Bitcoin’s structure. It is designed to be different from fiat currencies as it has been programmed to have only a limited number of tokens in circulation.
On the other hand, as the president of the ECB, she has the power to control the supply and circulation of the Euro as the situation demands, which cannot be said of cryptocurrencies.
Lagarde wants a new central bank digital currency (CBDC) to be developed where the token is pegged to the Euro. It will be the pride of the central bank if it is successfully launched.
That said, the rapid rise of CBDC is making changes in the digital asset space as it will make digital tokens centralized, unlike how they are operated in the crypto industry.
China is one country that has taken the CBDC a step further after it announced a blanket ban on cryptocurrency mining and used in its territory.