In the aftermath of the crypto market crisis, European Central Bank President (ECB), Christine Lagarde, stated that cryptocurrencies are ‘worth nothing’ as there is no underlying assets to act on as an anchor of safety.
In a recent interview, ECB President, Christine Lagarde, denigrated cryptocurrencies citing that crypto assets are highly speculative and extremely risky investments. Her harsh criticism has come after the market wide meltdown plunging the value of cryptocurrencies to hit rock bottom. Lagarde condemned the market volatility denouncing that cryptocurrencies hold no value. She said,
“I have said all along the crypto assets are highly speculative, very risky assets. My very humble assessment is that it is worth nothing. It is based on nothing, there is no underlying assets to act as an anchor of safety.”
A Possible Interest Rate Hike
Lagarde also hinted at a possible hike in the interest rate in July. Owing to rising inflation in the Eurozone, the ECB president signaled preference for interest-rate hike of 25 basis points. The ECB will likely end their bond purchase scheme at the earliest possible moment, paving the way for a rate hike. Lagarde remarked,
“We are going to follow the path of stopping net [bond] purchases and then sometime after that — which could be a few weeks — hike interest rates. A 50 basis-point hike is not something that I can tell you at this point here today.”
On the other hand, Lagarde seemed to advocate the introduction of central bank digital currencies (CBDC)in the European economy. She emphasized that a ‘digital euro is a completely different ball game.’ She indicated that ECB’s primary goal is to ensure that citizens as well as businesses continue to have access to the safest form of money, central bank money. She assured,
“The day when we have the central bank digital currency, any digital euro, I will guarantee it. So the central bank will be behind it. I think that is vastly different from any of those things.”
Is The Digital Euro Coming Soon?
Recently, the European Central Bank, revealed that it may start the development of its ‘digital euro’, by the end of next year. ECB board member, Fabio Panetta, said that the initial stage will assess the possible impact of a digital euro on the market, identifying the design options to ensure privacy and avoid risks for euro area citizens, intermediaries and the overall economy. He remarked,
“Finally, at the end of 2023 we could decide to start a realization phase to develop and test the appropriate technical solutions and business arrangements necessary to provide a digital euro.”