European Central Bank (ECB) President Christine Lagarde has taken aim at the crypto craze, saying it’s been enabling “funny business” and has been used for money laundering in some instances. She called for global regulation, and said the digital currency needs to be seen as a novelty and not the next big thing that will take over the world’s financial markets.
The ECB has launched a multi-agency initiative to develop regulations for digital assets, and is urging legislators around the world to adopt them quickly before the bubble bursts. The regulator’s new Financial Stability Review is set to hit the books this week and will include an emphasis on cryptocurrencies and their risks, which are a major concern to lawmakers and regulators alike.
ECB has also put its weight behind a potential digital euro, a central bank digital currency (CBDC), as well as a stablecoin.
It’s no secret that many investors are enamored with the crypto space and many millennials have invested in these innovative, technology-driven projects. But Lagarde isn’t among them and believes cryptocurrencies lack the economic value to be considered a legitimate currency.
The ECB is taking steps to protect its citizens from the risky craze, including asking for legislation to regulate these investments and is also promoting the development of a central bank-backed digital currency.
In a recent interview with the Dutch television program College Tour, Ms. Lagarde revealed she has never actually invested in crypto, but has an uncanny ability to spot a winning bet.
ECB has a lot of work to do if it wants to keep the eurozone economy humming and avoiding another financial crisis.