ECB President Christine Lagarde calls cryptocurrencies ‘suspicious’

    22 Sep 2021

    Amid a cryptocurrencies price explosion in 2021, European Central Bank (ECB) president Christine Lagarde argued cryptocurrencies aren’t currencies, which should be treated as “highly speculative” and “suspicious.”

    Speaking on a Bloomberg podcast, Lagarde said:

    “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,” she stated, according to a Forbes report. “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.”

    As investors bet on digital tokens, Bitcoin, Ethereum, Cardano, Binance Coin, Ripple, Solana, and Dogecoin have shown huge growth in 2021. However, Lagarde particularly praised stablecoins cryptocurrencies pegged to fiat currencies or real-world assets – like Tether and central bank digital currencies (CBDCs).

    “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,” she said.

    More than 70 governments and central banks around the world are experimenting with CBDCs. The ECB, lead by Lagarde, launched a project of digital euro in 2021, aiming to respond to private-sector digital currencies, such as Bitcoin or Diem, Facebook’s backed stablecoin.

    “And in all that you have the central banks who are prompted by a demand of customers to produce something that will make the central bank and central bank digital currencies fit for the century we are in,” Lagarde added. “I was keen to push the issue, the CBDC issue, on our agenda because I believe that we have to stand ready for that.”

    As reported before, in 2019, Lagarde said cryptocurrencies are “shaking the system,” but she warned that too much shaking could cost “the stability that is needed.”

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