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“Stablecoins masquerade as coins, but they are entirely associated with an actual currency,” remarked Christine Lagarde.
The European Central Bank’s head, Christine Lagarde, stated that all cryptocurrencies, including stablecoins and speculative assets, “are not currencies at all.”
In a Sept. 1 interview with World Economic Forum founder and executive chair Klaus Schwab, Lagarde said cryptocurrencies “present themselves as currencies,” but she still considered them as assets to be regulated and “supervised by asset regulators.” Under this definition, the ECB president claimed fiat-pegged digital currencies were also considered assets.
“Stablecoins are pretending to be a coin, but in fact it’s completely associated with an actual currency,” said Lagarde. “For instance, some of them are saying that they can be used for transactions, but the value will be exactly aligned to the dollar.”
She added that projects behind issuing any stablecoins should be required to fully back their assets with fiat:
“That needs to be checked, supervised, regulated so that consumers and users of those devices can actually be guaranteed against eventual misrepresentation. I think very recent history has shown that those reserve currencies were not always available and as liquid as they were intended to be.”
Lagarde could be referring to Tether, the largest stablecoin issuer in terms of market value. As part of a settlement with the Office of the New York Attorney General, the company recently agreed to pay $18.5 million in damages and submit to periodic reporting of their reserves until 2023. The Office of the New York Attorney General alleged that the stablecoin issuer had misrepresented the extent to which its USDT tokens were backed by fiat collateral.
Despite these seeming strong views on digital assets, Lagarde made it plain that the ECB planned to respond to its consumers. She has previously denounced stablecoins and cryptos, but she has not ruled out the prospect of the ECB issuing its own digital currency.
“If customers prefer to use digital currencies rather than have banknotes and cash available, it should be available,” Lagarde said. “We should respond to that demand and have a solution that is European based, that is secure, that is available, and friendly terms that can be used as a means of payment.”