update 18 August 2021

ECB President Lagarde Criticizes The Use Of Bitcoin And Cryptocurrencies

Christine Lagarde, President of the European Central Bank (ECB), has given her opinion on bitcoin (BTC). Lagarde believes that Bitcoin is a speculative asset and not worth the current hype surrounding its use.

Volatile And Speculative Asset 

Lagarde expressed her views on Sunday, February 7, on local french station BFM TV where she spoke on different financial topics. The ECB chief revealed that she considers bitcoin a superficial but highly speculative asset that robs investors. She further added that the leading coin was a tool used by criminals to funnel dark web activities. “It is generally these elements [cryptocurrencies] that are used to finance a certain number of businesses that take place on the dark web. Lagarde affirms. 

Despite the assertions of the ECB chief, a recent report from Chainalysis indicates otherwise. Although some people use bitcoin for illicit purposes, its share in total criminal activities is minimal. According to the report, the percentage of cryptocurrency transactions linked to illegal activities fell sharply in the past 12 months.  

In total, only 0.34% of the bitcoin network’s overall transaction volume ($10 billion) is linked to criminal activities. Also, the bitcoin blockchain network’s public nature means that authorities can trace illicit transactions, whereas cash is more difficult to trace. 

The Case for Diem and Digital Euro

During the show, the subject of the Facebook stablecoin project “Diem” was discussed. Christine Lagarde believes that Diem could play a similar role to fiat currencies. However, the idea of a Euro-backed Diem stablecoin does not appeal to the ECB chief. “Diem, which we used to call Libra, which is Facebook’s attempt to set up an element of exchange which would be exchanged for a dollar, or one euro, “So one euro no, because we disagree. But a dollar, maybe, after all,” she says. 

Lagarde also stated that the ECB and national central banks are working on extensive regulation in the crypto industry. ”It is imperative that, if a private actor carries out an activity, this activity is subject to precisely the same rules if it is similar to” money. ” She maintains. 

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Finally, the ECB chief revealed that there was progress regarding the digital euro. Several countries have begun trial processes, and more developments are expected in the coming months.