During a recent interview, Lagarde stated:
“It is essential to differentiate between cryptocurrencies, which are often highly speculative and consume substantial energy, yet do not function as currencies. Cryptocurrencies are not, unequivocally, currencies. They are speculative assets that may attempt to portray themselves as currencies, but fundamentally, they are not.”
Nonetheless, Lagarde lauded CBDCs and stablecoins that are tied to traditional currencies, highlighting Europe’s prominent stablecoin provider ‘e-Money,’ which is fully collateralized and supported by actual bank deposits and government bonds in commercial banks.
“There are stablecoins starting to appear, which some large tech companies are keen to promote and advance, and they require regulation along with corresponding oversight to ensure that they operate transparently in relation to their business activities, regardless of their branding,”
In a September 1 interview with Klaus Schwab, founder and executive chair of the World Economic Forum, Lagarde suggested that cryptocurrencies should be treated as assets that require regulation and supervision by asset regulatory bodies. Under this framework, she indicated that fiat-pegged digital currencies also fall within the category of assets.
“Stablecoins claim to be coins, yet their value is fundamentally tied to an actual currency,” Lagarde explained. “For example, some assert they can facilitate transactions, but their value is directly aligned with the dollar.”
She further asserted that any stablecoin issuance should ensure full backing of their assets with fiat:
“This must be verified, supervised, and regulated to provide assurance to consumers and users against potential misrepresentation. Recent history has highlighted that reserve currencies are not always as available or liquid as intended.”
Despite her strong views on digital assets, Lagarde made it clear that the ECB aims to cater to its customers. Although she has previously criticized stablecoins and cryptocurrencies, she did not dismiss the possibility of the ECB introducing a central bank digital currency.
“If customers favor digital currencies over traditional banknotes and cash, they should be made available,”
Lagarde stated.
“It is crucial to address that demand by providing a European solution that is secure, accessible, and user-friendly for payment purposes.”
Governments globally have intensified their efforts on CBDCs following the significant rise in popularity of stablecoins, largely due to demand for stable-value assets in the rapidly expanding DeFi and crypto capital markets. In July, the ECB’s governing council announced its intention to initiate a two-year investigative phase for the digital euro project.
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