Stablecoins are belongings — not currencies, says ECB president
Christine Lagarde, president of the European Central Bank, stated all cryptocurrencies, through which she included stablecoins and speculative belongings, “are not currencies at all.”
In a Sept. 1 interview with World Economic Forum founder and government chair Klaus Schwab, Lagarde said cryptocurrencies “present themselves as currencies,” however she nonetheless thought of them as belongings to be regulated and “supervised by asset regulators.” Under this definition, the ECB president claimed fiat-pegged digital currencies had been additionally thought of belongings.
“Stablecoins are pretending to be a coin, but in fact it’s completely associated with an actual currency,” stated Lagarde. “For instance, some of them are saying that they can be used for transactions, but the value will be exactly aligned to the dollar.”
She added that initiatives behind issuing any stablecoins ought to be required to totally again their belongings with fiat:
“That needs to be checked, supervised, regulated so that consumers and users of those devices can actually be guaranteed against eventual misrepresentation. I think very recent history has shown that those reserve currencies were not always available and as liquid as they were intended to be.”
Lagarde might have been referring to Tether, the biggest stablecoin issuer by market capitalization. The firm lately agreed to pay $18.5 million in damages and undergo periodic reporting of their reserves till 2023 as a part of a settlement with the Office of the New York Attorney General, who alleged that the stablecoin issuer had misrepresented the diploma to which its USDT tokens had been backed by fiat collateral.
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However, regardless of these seemingly robust opinions on digital belongings, Lagarde made it clear the ECB supposed to reply to its clients. She has beforehand criticized stablecoins and cryptocurrencies, however did not rule out the likelihood the ECB would introduce a central financial institution digital currency. In July, the ECB’s governing council stated it could launch the investigation section of a digital euro undertaking lasting two years.
“If customers prefer to use digital currencies rather than have banknotes and cash available, it should be available,” Lagarde stated. “We should respond to that demand and have a solution that is European based, that is secure, that is available, and friendly terms that can be used as a means of payment.”