See More

Privately-Issued Stablecoins Pose Greater Risk than Bitcoin, Says ECB

2 mins
Updated by Ryan Smith
Join our Trading Community on Telegram

In Brief

  • ECB President Christine Lagarde says that stablecoins pose a greater risk than bitcoin.
  • Lagarde is particularly concerned about ‘big tech’ stablecoin efforts.
  • A digital euro would help preserve European monetary sovereignty in the face of such competition.
  • promo

Christine Lagarde has identified stablecoins as representing a greater risk to financial stability and the monetary sovereignty of the EU than cryptocurrencies like bitcoin.

The European Central Bank (ECB) President says that volatile prices and lack of liquidity make BTC and other digital assets poorly suited for use as money.

Lagarde is also keen to push on with the ECB’s digital euro. She claims that such a central bank-issued digital currency (CBDC) would help protect the EU’s monetary sovereignty.

Lagarde Says Privately-Issued Stablecoins Pose Particular Risks

Christine Lagarde doesn’t think that bitcoin and other fixed-supply digital assets represent a particular threat to the financial status quo in Europe. 

Writing for the magazine L’ENA hors les murs, the ECB President stated that cryptocurrencies like bitcoin do not “fulfill all the functions of money.”

She identified their lack of price stability, as well as the “flawed concept of there being no identifiable issuer” as obstacles hindering the adoption of such digital currencies.

However, privately-issued stablecoins, particularly those backed by “big techs,” present “serious risks.” While not explicitly mentioned, it’s likely Lagarde is referring specifically to Facebook’s Libra.

The stablecoin project attracted immense scrutiny when the social network company announced it last year.

Lagarde stated that digital currencies with pegged prices threaten the “competitiveness and technological autonomy” of the European Union. She also added that efforts from big tech to create digital currencies raises the important issue of data privacy.

BeInCrypto reported last week on a major German bank’s prediction that Bitcoin’s surging market cap would press the ECB to launch its digital euro. 

Would a Digital Euro Help to Mitigate These Threats?

Lagarde also reiterated the importance of current ECB efforts to create a digital euro. She claimed that central bank-issued currency is attractive because it represents a “risk-free and trusted means of payment.”

However, in its current form, the euro does not meet the evolving needs of individuals in an increasingly digital world.

The ECB President added that a digital euro would help to unify the European economy, as well as preserve its monetary sovereignty in the face of international efforts to create CBDCs.

There are numerous efforts by central banks to launch digital currencies around the world. Of those from major economies, China’s digital yuan appears to be the furthest along having undergone various stages of testing in recent months.

Top crypto platforms in the US | March 2024
Coinbase Coinbase Explore →
AlgosOne AlgosOne Explore →
Chain GPT Chain GPT Explore →
iTrustCapital iTrustCapital Explore →

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

c8d670c5ace3fefdd9c2b09519d3b3c7?s=120&d=mm&r=g
A former professional gambler, Rick first found Bitcoin in 2013 whilst researching alternative payment methods to use at online casinos. After transitioning to writing full-time in 2016, he put a growing passion for Bitcoin to work for him. He has since written for a number of digital asset publications.
READ FULL BIO
Sponsored
Sponsored