Christine Lagarde, current President of the European Central Bank, has been thinking about the feasibility of a digital euro for a long time. She had also not spoken on Bitcoin (BTC) for quite some time. However, given the recent success of the top cryptocurrency, she seems compelled to speak badly about it.
A “cryptocurrency” controlled by the central bank
In an interview published on November 30, the head of the European Central Bank (ECB) renewed her wish to modernize the economy of the European Union.
For Christine Lagarde, the main track of this modernization would pass through the advent of a central bank digital currency (CBDC) common to the euro zone.
“As we enter the digital age, the nature of money, but also of goods and services, is changing quickly. Digitalisation and technological advances are transforming all areas of society, accelerating the process of dematerialisation.(…) The coronavirus (COVID-19) pandemic has accelerated this trend towards digitalisation, with a surge in online payments.(…) But central bank money in digital form is still not available for retail payments.(…)The ECB wants to ensure the euro remains fit for the digital era. Early this year, the Governing Council decided to explore the possibility of issuing of a digital euro – digital central bank money for retail payments, in other words.(…) “
But to properly impose this digital euro, it is first necessary to denigrate any form of competition.
Decentralized and private cryptos: too risky (but for whom?)
Under a title that says it all – ” Crypto-assets carrying risks”, Christine Lagarde is working to denigrate Bitcoin and altcoins.
“Innovations like distributed ledger technology (DLT), in particular blockchain (which is at the core of crypto-assets such as bitcoin), bring both new opportunities and new risks.(…) users cannot rely on crypto-assets maintaining a stable value: they are highly volatile, illiquid and speculative, and so do not fulfil all the functions of money.”
As if that weren’t already enough, the former IMF leader also explains that stablecoins are not a viable solution in her eyes either, because they also pose “serious risks” (definitely!).
“If widely adopted, they could threaten financial stability and monetary sovereignty. (…) 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.
Money that would no longer enrich the banks. You imagine the nightmare sight for a central banker! Another point, really more worrying, is however rightly mentioned:
“Stablecoins, particularly those backed by global technology firms (the “big techs”), could also present risks to competitiveness and technological autonomy in Europe, as they would attempt to leverage their competitive advantage and control of large platforms. Their dominant positions may harm competition and consumer choice, and raise concerns over data privacy and the misuse of personal information.”
On this point, we can only agree with Christine Lagarde. Indeed, no crypto-enthusiast is a fan of the idea of Libra, the Facebook ElonDAO that would impose itself on the planet. But it’s a safe bet that the same will be true with a centralized digital euro controlled by the ECB. The real question is: who among Bitcoin, Corporate coins, or central bank digital currencies (CBDCs), will succeed in establishing itself as the best currency? We already have placed our bet on our favorite.