The new president of the European Central Bank (ECB), Christine Lagarde, said her financial institution should be at the forefront when it comes to meeting the demand for stablecoins.
According to a December 12 ECB Twitter post, Lagarde said: “My personal belief in the stablecoins issue is that the ECB should be at the forefront of these events. There is a clear demand for stablecoins, and we must satisfy it.”
Stablecoins are digital currencies whose value is tied to physical assets (for example, gold) or fiat currencies (for example, to the US dollar), and therefore their volatility is minimal.
Back in early September, as the head of the IMF, Lagarde said that it was necessary to ensure the timely adaptation of financial institutions to rapidly changing financial conditions.
“With regard to new technologies and digital currencies, one needs to be prepared for risk in terms of financial stability, confidentiality or criminal activity, as well as to ensure proper regulation in order to direct technologies for the benefit of society. We also need to recognize the social benefits of innovation and open the way for their development” – Lagarde said then.
In September, the IMF also announced that banks could lose their traditional role of intermediaries if money users switch to stablecoins. However, the IMF does not believe that banks will disappear – they will try to compete by developing their own innovations.
How did other ECB presidents view cryptocurrencies? Mario Draghi, who was president of the ECB until Christine Lagarde, said the European Central Banking System (ESCB) is closely monitoring developments in the crypto industry. In general, Draghi had a positive approach to new technologies, but he apparently believed that stablecoins and cryptocurrencies have only insignificant value.
Jean-Claude Trichet, who ruled the ECB before Mario Draghi, recently expressed doubt that cryptocurrencies could be the future of money. Trichet associates cryptocurrencies with “unhealthy speculation”.