Christine Lagarde, President of the European Central Bank, played down any risks that Bitcoin and other cryptocurrencies may pose to financial stability and monetary sovereignty. Instead, she believes that stablecoins (such as Facebook-backed Libra) pose a “serious risk.”
Christine Lagarde, Libra of Bitcoin and Facebook
The President of the European Central Bank, Christine Lagarde, shared her views on the future of currency in an article published on Monday in the magazine “L’ena hors les murs”. She specifically discussed “Bitcoin or other encrypted assets that are trying to gain a foothold in the digital payment field and build trust in their technology.”
Lagarde first pointed out that innovations such as blockchain technology “bring both new opportunities and new risks.” She pointed out that peer-to-peer (P2P) transactions “do not require a trusted third-party intermediary” and claimed that the trust “has been replaced by encrypted proofs, and that DLT ensures the security and integrity of records, thereby avoiding “double spending”. Question.” The ECB President stated:
The main risk lies in purely relying on technology and the misconception that there is no identifiable issuer or claim. This also means that users cannot rely on crypto assets that maintain stable value: they are highly volatile, liquid and speculative, and therefore cannot fulfill all the functions of a currency.
Lagarde went on to point out that, unlike Bitcoin, stablecoins “posed a serious risk” even though they “can promote more innovation in the payment field and integrate well into social media, trade and other platforms”. She explained that stablecoins “try to solve the problem of the lack of stability and trust in encrypted assets by linking their assets to stable and reliable legal tender issued by the state.”
In addition, the issuers of “global” stablecoins “are aimed at introducing their own payment schemes and clearing and settlement arrangements.” Global stablecoins are stablecoins that may be widely adopted by the public from the beginning, such as Facebook-supported Libra.
The President of the European Central Bank warned that if these global stablecoins are widely adopted, “they may threaten financial stability and monetary sovereignty.” For example, she explained: “If the issuer cannot guarantee a fixed value, or if the issuer cannot afford a fixed value In addition, the use of stablecoins as a store of value may trigger a large transfer of bank deposits to stablecoins, which may affect bank operations and the transfer of monetary policy.”
In addition, Lagarde believes that stablecoins supported by global technology companies “may also pose risks to European competitiveness and technological autonomy, as they will try to use their own competitive advantages and control over large platforms,”
Their dominance may harm competition and consumer choice, and raise concerns about data privacy and personal information abuse.
Raoul Pal, a hedge fund manager at Goldman Sachs, commented on Lagarde’s views and wrote on Twitter: “Fear is real. They think stablecoins are threats, not bitcoins. currency.”
What do you think of Lagarde’s views on Bitcoin and stablecoins? Let us know in the comments section below.
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