Christine Lagarde, the former managing director of the International Monetary Fund (IMF) who’s now the president of the European Central Bank (ECB), has said digital tokens, such as bitcoin and ethereum, aren’t currencies.
Asked by Bloomberg podcast host David Rubenstein whether “cryptocurrencies are a plus for the global economy,” Lagarde shot back: “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.”
Clearly not a big fan of Cryptos she is however open to stablecoins, cryptocurrencies that are tied to traditional currencies or real-world assets, and central bank digital currencies (CBDCs). “On the other hand, 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.”
And why is that important well because under Lagarde, the ECB this year launched a digital euro project, designed as a response to private-sector digital currencies from bitcoin to Facebook’s proposed diem stablecoin. It’s not expected to launch for around five years, however. In the meantime, the ECB and Eurozone regulators will have to deal with the soaring popularity of bitcoin and other cryptocurrencies—with Lagarde’s comments suggesting she takes a dim view of digital currencies.
So why should we care? Well Governments and central banks around the world, most importantly in the U.S. and China, are beginning to experiment with CBDCs. China has stolen an early lead, with real-world trials already underway, but the U.S. Federal Reserve is known to be investigating a digital dollar
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