The chairwoman of the International Monetary Fund (IMF) and presidential nominee European Central Bank (ECB), Christine Lagarde has encouraged lawmakers to keep an open mind to the opportunities provided by cryptocurrencies by distributed ledger technology when developing crypto regulations.
In a statement sent to the Economic and Monetary Affairs Committee of the European Parliament, Lagarde urged regulators and central banks to even out both the risks and opportunities that could succumb as a repercussion of new financial technologies.
With regard to crypto, the chairwoman indicated that supervisory authorities must be aware to the risks regarding “financial stability, privacy, or criminal activities,” while also “recognizing the social benefits from innovation” and “ensuring regulation is in place to steer technology towards the public good.”
At the start of September, an ECB board member took aim at Facebook’s upcoming stablecoin, Libra.
As Lagarde spoke to lawmakers, Yves Mersch spoke to attendees last week at the European System of Central Banks’ conference. Mersch said that Libra was a siren call and described the move as a ‘cartel-like’ venture.
“With such a set-up, it is difficult to discern the foundational promises of decentralization and disintermediation normally associated with cryptocurrencies and other digital currencies.”
A big 55-page report was published in August by the ECB in regards to stablecoins. The report claims that coins of that nature manifest a trade-off between the innovation in the stabilisation mechanism underpinning the digital currency and the stability of the value of the tethered currency.
“On the one hand, the least innovative stablecoin initiatives focus on the mere tokenisation of currency units: they rely on traditional systems for the safekeeping of funds, in the form of either electronic money or scriptural money, and use distributed ledger technology (DLT) to issue their mere representations in the form of claims on the entity in charge. On the other hand, most innovative initiatives currently do not keep to the promise of maintaining a stable value.”
It will be interesting to see how this plays out. For more news on this and other crypto updates, keep it with CryptoDaily!