European Central Bank president says crypto is ‘worth nothing’

By Jon Bragg

May 24 2022
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European Central Bank president Christine Lagarde has shared her views on the value of crypto and the importance of regulation.

Cryptocurrencies have been deemed “super risky” by the president of the European Central Bank (ECB), Christine Lagarde.

“My very humble assessment is that it is worth nothing. It’s based on nothing, there is no underlying assets to act as an anchor of safety,” Ms Lagarde suggested in an interview with Dutch television on Sunday.

“I’ve said all along that crypto-assets are highly speculative, very risky assets. If you want to invest there, it’s your choice. But what I’m really concerned about when it comes to crypto-assets is that those investments be made by people who have their eyes wide open about the fact that they can lose it all.”

Ms Lagarde pointed to the recent volatility in crypto markets, which drove a fall of 20 per cent in just one week.

The collapse of the TerraUSD stablecoin sent the market into a panic earlier this month and also raised fears about the potential broader financial implications.

“I’m concerned about those people who assume that it’s going to be a reward who have no understanding of the risks, who will lose it all and who will be terribly disappointed, which is why I believe that that should be regulated,” Ms Lagarde said.

She also distinguished central bank digital currencies (CBDC), including the ECB’s own proposed digital euro, from other crypto-assets.

“The day when we have the central bank digital currency out, any digital euro I will guarantee. So the central bank will be behind it, and I think that’s vastly different from any of those things,” noted Ms Lagarde.

An ECB official indicated last week that the eurozone could be using a CBDC by 2026.

Former Treasurer Josh Frydenberg previously indicated that the federal government was moving forward on Australia’s first retail central bank digital currency with a pilot program expected before the end of 2022.

Elsewhere, US President Joe Biden signed an executive order on digital assets which included a statement that his administration would place “the highest urgency on research and development efforts into the potential design and deployment options” of a CBDC.

During her interview, Ms Lagarde was also asked whether she herself held any crypto investments.

“No I don’t, because I want to practice what I preach,” she answered, before adding: “I know how it works and I actually have a son who invested in cryptos, yes so I follow it very carefully.”

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