ECB President Criticizes Bitcoin and Stablecoins But Praises Digital Euro

The President of the European Central Bank (ECB) Christine Lagarde has spoken negatively of Bitcoin the world’s first-ever decentralized digital currency and stabecoins or privately-owned cryptocurrencies while talking about risks linked with these digital assets. However, she has praised the European Central Bank’s Central Bank Digital Currency (CBDC) called Digital Euro.

Risky Assets

Christine Lagarde has presented her views regarding the leading digital currency Bitcoin and privately-owned digital assets in an official article released on the 30th of November in a magazine called “L’ENA hors les murs”. She has severely criticized stablecoins and other cryptocurrencies especially Bitcoin (BTC).

While targeting privately-owned digital currencies, ECB President regarded them as risky assets. She is of the view that these technology companies-backed stablecoins pose a great threat to people in the European region as there are serious risks associated with them. Her concerns include the wrong usage of personal data or information and the violation of privacy. While outlining her concerns regarding the usage of these assets, she said that major technology companies can use these stablecoins for illicit purposes. Particularly, she bashed Libra a cryptocurrency project backed by the social media giant Facebook. Libra is already facing regulatory issues.

She said in a statement:

“If widely adopted, stablecoins could threaten financial stability and monetary sovereignty. For instance, if the issuer cannot guarantee a fixed value, or if they are perceived as being incapable of absorbing losses, a run could occur. Additionally, using stablecoins as a store of value could trigger a large shift of bank deposits to stablecoins, which may have an impact on banks’ operations and the transmission of monetary policy.”

She also bashed Bitcoin’s volatile and speculative nature

Moreover, she also spoke negatively of the leading digital currency Bitcoin and other cryptocurrencies. She said that these digital assets have a highly volatile and speculative nature which may pose a great threat to users. Therefore, she said that cryptocurrency investors and traders are required not to depend highly on these cryptocurrencies.

She is not the only one who considers Bitcoin only a speculative asset but the new United States Treasury nominee Janet Yellen is also not a big fan of the top digital asset and called it a speculative asset in her statement back in the year 2017 when Bitcoin was at the height of its bull run. She said that she does not consider Bitcoin as a stablecoin store of value.

On the other hand, the President of ECB has issued positive remarks in the favor of the central bank’s digital currency Digital Euro. She said that Digital Euro is a unique currency as it can come upon fully the needs of emerging digital payments.