The president of the European Central Bank (ECB), Christine Lagarde, was present at a news conference this Thursday in Frankfurt, Germany. Europe is in a troubled position as the war between Russia and Ukraine continues to ravage the economies of several countries on its map. However, the ECB seems to be more concerned about the record inflation rates in the European countries and not the weak economic growth caused due to the war.
In the event in Frankfurt, the ECB President Christine Lagarde made a bold claim and said that crypto-currencies are “based on nothing”. She went on to say that digital currencies should be regulated to prevent people from gambling with them with all of their life’s savings.
On being questioned about why she believes that cryptocurrencies should be regulated, Lagarde said that she is concerned about people who have no technical know-how concerning how cryptocurrencies work and what the risks are while trading with them. These people might lose all of their initial investment and may end up disappointed. This is why Lagarde is considering cryptocurrency regulation.
The crypto winter is one of the major reasons why several world leaders and regulation makers are worried about cryptos. Some of the leading cryptocurrencies like Bitcoin and Ether are down by as much as 50% from 2021’s peak values. This has worried regulators, and thus cryptos have faced tougher scrutiny over the last few weeks.
The ECB is also working on its cryptocurrency, the digital euro. The president’s comments, citing the coins as “based on nothing”, are completely in contrast to the board’s recent moves with digital money. Reportedly, the EU will introduce the digital euro within a few years.
Lagarde went on to say, “My very humble assessment is that it is worth nothing, it is based on nothing, there is no underlying asset to act as an anchor of safety”. She also publicly announced that she does not hold any crypto assets. Her official statement was, “I want to practice what I preach”. But, she added that she follows the coins very carefully.
However, Lagarde is not the first ECB official to express her concerns surrounding crypto publicly. Fabio Panetta, an ECB executive board member, previously stated that cryptocurrencies were creating a new wild west. He drew its connections with the subprime mortgage crisis of 2008.