Christine Lagarde – the president of the European Central Bank – has issued a warning about cryptocurrencies like bitcoin and Ethereum, calling them highly speculative and saying that they are “suspicious.”
Lagarde: Crypto Is NOT Cash!
Bitcoin and digital assets have shot up like crazy over the past year. The idea is that these assets are becoming hedge tools against inflation and other economic problems caused by the current presidential administration and ongoing coronavirus fears. While many people have garnered newfound respect for these assets, Lagarde feels very differently, and says that they are not cash and should not be treated as such.
In a recent interview, Lagarde commented:
I think we have to distinguish between cryptos that are highly speculative and 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.
Among the big price highlights to occur for digital assets over the past several months include bitcoin reaching a new all-time high of approximately $64,000 per unit in April. In addition, Ethereum also experienced a new high of about $4,000. Other assets, such as Solana, Ripple’s XRP and Binance’s BNB, have also incurred triple-digit gains.
These currencies – and many others like them – are not garnering affection from Lagarde, though she was rather praising of stable currencies in her interview, claiming:
You have those stable coins 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.
Many banks and governments across the globe have been looking at stable coins as of late, recognizing that cryptocurrencies are becoming much more prominent and that they need to stay current to compete. The ECB itself ultimately launched a digital euro project earlier in the year under Lagarde’s direction and guidance. She continued her praise of the stable currency space with:
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. I was keen to push the issue, the CBDC issue, on our agenda because I believe that we have to stand ready for that.
Stable Currencies May Provide Solid Answers
One figure sharing this sentiment is Benoit Coeure, the head of innovation at the Bank for International Settlements (BIS). He recently stated of stable currencies:
CBDC (central bank digital currencies) will be part of the answer. A well-designed CBDC will be a safe and neutral means of payment and settlement asset.