Christine Lagarde, President of the European Central Bank, recently talked to the media about the stance of the main financial institution on the matter. She exclaimed that for European consumers, cryptocurrencies are not a viable asset class. She was invited to a Dutch Television show called College Tour.
In addition, the head of the Central Banking enterprise further explained that cryptocurrencies are subject to high volatility and speculation and are not a good investment option for the masses with smaller risk insurance. Her statement further postulates that, in her personal opinion, cryptocurrencies do not possess any monetary value.
One of the most celebrated qualities of cryptocurrencies is that they are noted as being a hedge against inflation. However, Lagarde seems to disagree with this stance; she claimed that digital currencies are not backed by any other asset, and, therefore they cannot work as a viable safety net for their investors. On the other hand, the Group of Seven or G7 alliance finance ministries and central banking leadership can issue a verdict on the matter.
The G7 is scheduled to gather in Germany on the 19th or 20th of May. One topic on the agenda of the G7 countries is to discuss the matter of cryptocurrency regulations.
The discussion has sparked the waves generated by the sudden downfall of the Terra Chain native currencies LUNA and UST. After the UST stablecoin peg was broken, both currencies crashed to near zero creating a FUD throughout the cryptocurrency community.
ECB to Introduce New Financial Policy
In line with the Federal Reserve’s policies to raise interest rates, the ECB is also planning to introduce a similar financial policy in the region.
The Central Banking enterprise recently suggested that it can hike interest in July to contain the economic fall of the Eurozone and combat the hailing storm of inflation in the region. Lagarde also attempted to make light of the inflation projections estimated to be fifty points.
She claimed that the ECB plans to stop more purchases of bonds by implementing an interest hike in a matter of a few weeks.
It is worth noting that her stance on cryptocurrencies matches the ideas shared with Janet Yellen, the Treasury Secretary of the USA. ECB monetary policies suggest that the bank is planning to wrap up its asset purchase by the 3rd quarter, and on the other hand, it will implement interest hikes during July this year.