It’s official – Christine Lagarde, the current head of the IMF, has been nominated to replace the outgoing Mario Draghi as head of the ECB. Known as both a politician, as well as an economist, Ms. Lagarde will bring a much-needed breath of fresh air to the central banking affairs of the EU. Although Lagarde’s primary duty will be to “bring unity and prosperity to the various EU States,” crypto advocates already believe that she will bring a level of awareness and acceptance of the digital landscape to the ECB that has not been experienced heretofore.
Publicly, Ms. Lagarde has appeared to be both positive and negative regarding all things crypto. As we reported last April:
On one day, she posits in an interview with CNBC that all things crypto are a disruptive technology that is definitely changing the way businesses operate, but in order to make the changes acceptable, there must be controlling regulations in place. A day or two later, the IMF announces that it is teaming up with the World Bank to operate an internal coin system to facilitate its staff learning the ins and out of cryptocurrencies and blockchain technology.
Here are just a few of her more notable comments over the past year:
- “Having central banks issue digital currency can bring about financial inclusivity, better security and consumer protection, as well as allay privacy concerns.”
- “Digital currencies are likely to become more convenient to use and integrated with social media. They will be readily available for online and person-to-person use, including making micro-payments. And of course, we expect it to be cheap and safe, protected against criminals and prying eyes. Identities would not be disclosed to third parties or governments unless required by law.”
- “Private firms may under-invest in security in the nascent days of cryptocurrencies. Trust in digital currencies would be eroded in the event of a private system breakdown.”
- “I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system. We don’t want to shake the system so much that we would lose the stability that is needed.”
Ms. Lagarde seems to be in the regulatory camp that wishes to promote innovation without stifling it, but at the same time, her origins lead her to prefer centralized approaches, rather than decentralized ledger systems. She has also been “pro” experimentation by central banks with blockchain technology and with what have been termed “Central Bank Digital Currency” (CBDC) pilot projects.
While Lagarde has spoken out about cryptos and blockchain technology in positive tones, the outgoing ECB president, Mario Draghi, has not been as generous with his public comments. Earlier this year, he remarked that: “Cryptocurrencies are not currencies, but “highly risky” assets.” His rather offbeat remarks caused the ECB and other central banks to distance themselves from crypto experimentation and the responsibility of regulating cryptocurrencies.
Ms. Lagarde’s nomination, however, came as good news for much of the Bitcoin and crypto community. Advocates expect her awareness and openness to be “good for the industry.” Others have expressed that Lagarde is “pro-crypto herself and has shown tremendous interest in how the nascent tech can help shape the future’s global economy.”
According to Mati Greenspan, senior market analyst at the eToro brokerage:
Several people have pointed out to me already is that the next ECB boss is incredibly crypto friendly. Indeed, Christine Lagarde who is set to replace Mario Draghi on 1 November is extremely pro digital assets. Not bitcoin, of course, but she has advocated already for state-backed cryptocurrencies as well as settlement tokens like XRP and JPM coin. We can expect that someone so crypto friendly in such a position will be good for the industry as a whole.