ECB chief executive said about the lack of cryptocurrency collateral

According to Christine Lagarde, the sphere of digital assets needs to be regulated to protect investors from speculation

23.05.2022 - 07:15

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What’s new? European Central Bank (ECB) President Christine Lagarde said that cryptocurrencies are not secured and should be regulated to protect investors from speculation. She also contrasted cryptocurrencies with the digital euro, which could be issued in the next four years through the ECB’s efforts, Bloomberg reports.

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What else did Lagarde report? The ECB chief is concerned about people who do not realize the risks associated with cryptocurrencies. They “will lose it all and who will be terribly disappointed,” Lagarde added, stressing that in this regard she believes it is necessary to regulate the sphere of digital assets. She also noted that cryptocurrencies are not secured by an underlying asset that could serve as “an anchor of safety.”

What events happened before? The European Central Bank (ECB) may start developing and testing the digital euro as early as 2023. According to Fabio Panetta, a member of the ECB’s executive committee, this phase would take the regulator up to three years. He also noted that the successful implementation of a central bank digital currency (CBDC) could be facilitated by its recognition as legal tender and use in P2P payments.

ECB Executive Board member Fabio Panetta called cryptocurrencies a threat to the global economy. According to the ECB member, many people do not understand “what they are buying,” so he called for stricter regulation of the crypto market. This initiative should be aimed at reducing risks for the financial sector.

In April, the European Commission started considering imposing tight restrictions on the use of stablecoins instead of fiat currencies. Regulators may be given the power to require issuers to stop issuing new coins if their volume exceeds 200 million EUR and 1 million transactions per day. The issuance may be allowed again when the figures fall below this threshold.

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