Christine Lagarde has been at the helm of the European Central Bank since 2019. During her time as the head of the ECB, she has made her thoughts regarding the crypto sector well known. Given her importance in terms of policymaking in the global financial sector, her words carry a lot of weight. Recently, Lagarde made her thoughts known regarding the crypto sector. She believes cryptocurrencies are worthless.
Lagarde Shares Her Thoughts On Crypto
During an interview in Carré, Amsterdam, Lagarde stated that “cryptocurrency is worthless. It is founded on nothing, and there are no underlying assets to serve as a safety anchor.” In essence, Lagarde believes that crypto is worthless since it is only backed by the belief of the crypto community.
The president of the ECB added that she had always believed crypto was extremely risky and highly speculative. In her opinion, those who do not understand the risk that comes with crypto trading would lose everything.
She Believes In CBDC
While Lagarde does not believe in new technology, she believes in the planned European CBDC. The main reason for this is that the European Central Bank will back it. She said that when the digital euro was launched, she would guarantee it. As a result, it would have the full backing of the ECB, which is different from cryptocurrencies.
Plans To Hike interest Rates
During the interview, Lagarde revealed that the ECB was ready to hike interest rates in July to fight inflation. However, there was no possibility of a 50 basis point increase, as some European central bankers had proposed. The current expectation is for a 25 basis point increase. According to Lagarde, the ECB will first phase out bond purchases before beginning to hike rates in July.
When that happens, it could mean fewer people are willing to invest in crypto, as has previously happened when the US Federal Reserve has raised interest rates. Consequently, it could be the start of the global crypto winter.
Is Crypto Worthless?
Over the years, some opponents of Bitcoin have pointed out that it is worthless. Their primary reason for this conclusion is that BTC is not backed by any asset or central bank. Consequently, they have predicted it was a Ponzi scheme that was a few months away from total collapse.
However, none of those predictions have come to pass. While BTC’s value fluctuates widely, it is not worthless. One reason for this is that there is a solid community that believes in BTC. This community is always willing to accept BTC as something valuable. In the world, that is how everything gets its value; by people accepting it has value.
A good example of this is gold, since ancient times, its scarcity, difficulty to obtain, and difficulty to replicate, made it have value. As a result, many people were willing to accept it as something of value. BTC and ETH shares some of these characteristics. For one, it is rare, scarce, and difficult to acquire via a complex process called mining. Its uniqueness, combined with a large global community that accepts that it has value and is willing to receive it in exchange for cash or services, or goods, means it does have value.
