Stablecoins are lauded as a safe solution to volatility, leading the ECB president to push for innovation. However, the presidents before her seem to believe that the crypto market has no future in this industry.
- Christine Lagarde was preceded as ECB president by Jean-Claude Trichet and Mario Draghi.
- Both previous ECB presidents are fairly unsupportive of cryptocurrency.
Christine Lagarde is the president of the European Central Bank, and she’s recently made it clear how highly she holds stablecoins. In a recent tweet, she urged the bank to take note of the substantial demand for stablecoins in the world, adding that the institution needs to “be ahead of the curve,” regarding the issuance of stablecoins.
Lagarde: My personal conviction on the issue of stable coins is that we better be ahead of the curve. There is clearly demand out there that we have to respond to.
— European Central Bank (@ecb) December 12, 2019
Stablecoins fall under the umbrella of digital currencies and cryptocurrencies. However, rather than holding their own value as a result of demand, they are pegged to a physical asset or fiat currency, reducing the volatile nature that exists in the industry.
Prior to becoming the president of the ECB, as the head of the International Monetary Fund in September, she stated that she would push for institutions to keep up with and adapt to the new financial environment. At the time, she said,
“In the case of new technologies – including digital currencies – that means being alert to risks in terms of financial stability, privacy or criminal activities, and ensuring appropriate regulation is in place to steer technology towards the public good. But it also means recognizing the wider social benefits from innovation and allowing them space to develop.”
Later in the month, the IMF released a statement on stablecoins, noting that they stood to bring major benefits to both individual customers and society as a whole. While introduction of this asset class could result in the loss of banks as intermediaries, the IMF believes that banks would likely work on their own options to compete with stablecoins.
Jean-Claude Trichet, the former president of the ECB, doesn’t share Lagarde’s stance on stablecoins, recently remarking that he doesn’t see cryptocurrencies ever taking over money. If anything, Trichet seeks cryptocurrency purchases as nothing more than speculation, even with the backing of a real asset.
Mario Draghi, who immediately preceded Lagarde, remarked that the cryptocurrency industry’s development is presently being watched by the European System of Central Banks. Draghi has continually been supportive of new technologies but sees both stablecoins and cryptocurrencies in general as being of little value.