Developing cryptocurrency regulations in Europe necessitates receptiveness and open-mindedness, says the presidential nominee for European Central Bank (ECB) and the current chairperson of the International Monetary Fund (IMF), Christine Lagarde.
Lagarde has been appointed to take over from the existing ECB President, Mario Draghi, from Nov 1 onwards. This will necessitate her eight-year-old tenure as IMF’s chairperson to end on Sep 12.
During her recent opening statement to the Economic and Monetary Affairs Committee of the European Parliament, Lagarde recommended the lawmakers and financial regulators to be fair and tolerant to the opportunities offered by cryptocurrencies and distributed ledger technology and take a methodical approach whenever considering their implementation.
She further asserts that central banks need to carefully weigh all the pros and cons of disruptive technology before taking a stance.
Start with weighing up pros and cons, argues IMF head
Lagarde was quick to point out the fact that although cryptocurrencies contribute to growth in criminal activities and financial instability, unknowingly and sometimes knowingly, the long-term benefits offered by this visionary innovation are too substantial to let go. And thus, ensuring the regulation steers the technology towards social welfare will be advantageous to all.
A laissez-faire economic system, where government officials are not directly administering the private sector, is precisely what is required for blockchain and cryptocurrency-related firms to develop this technology for the public’s benefit, IMF chief contends.
ECB’s hostile stance to stablecoins
Meanwhile, ECB’s executive board member, Yves Mersch, took a jab at Facebook’s ambitious stablecoin project, Libra, earlier this month, analogizing its foundation with “cartel-like” governance. With a set-up such as Facebook’s, it is difficult to get a good grasp of the overall consequences and whether it can actually be associated with decentralization, given the number of investors in the project, proclaims Mersch.
Last month, the ECB put forth a comprehensive report on the use of stablecoins, primarily emphasizing on the fact that the most innovatively designed stablecoins do not do much in terms of bringing about the stability in value and instead rely on conventional safekeeping methods for funds.