ECB President Christine Lagarde Backs CBDC Over Crypto

• She discussed the crypto ecosystem, stressing the need of backing CBDCs.
• Central bankers are missing a chance if they do not accept CBDCs.

Central bankers are becoming jittery as the use cases for cryptocurrencies and other blockchain-based currencies expand. Digital assets are very volatile and risky, yet traditional institutional investors are still adopting them. Also, retail traders and investors are showing a growing interest in the cryptocurrency market. Given this situation, it is more important than ever to meet the growing demand for emerging financial products.

Banks Losing Out to Crypto

European Central Bank (ECB) President Christine Lagarde has said that the institution must now adapt to the growing popularity of cryptocurrencies. At a Tuesday talk hosted by Banque de France, she discussed the crypto ecosystem, stressing the need of backing CBDCs in her remarks. She also said that central bankers are missing a chance if they do not accept central bank digital currencies (CBDCs).

According to the head of the European Central Bank, central bankers have been acting as an anchor in terms of monitoring the banks and private capital. According to her, central bankers run the danger of losing their function as a steadying influence on the economy because of crypto assets. According to Christine Lagarde, people need to be actively involved in trying new things and coming up with novel approaches to CBDCs.

Lagarde has posed the possibility that widespread adoption of cryptocurrencies may usher in a new era of “free banking.” According to what she indicated, the last phase of unrestrained banking occurred throughout the 19th century. She went into more detail about the reasons why the response shift is essential for central banks to retain their role as an anchor.

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