Isabel Schnabel, a member of the ECB executive board, took to Twitter to talk about her interview with Der Spiegel regarding the slowdown in the global economy to cryptocurrencies and a lack of regulation in the finance sector.
She took to Twitter to highlight some of the key points.
A Correction On The Cards?
Ms. Schnabel talked about the global economic slowdown, with the markets only beginning to recover. However, she noted that the stock markets' current situation could be a cause for concern and that there could be an increased risk of corrections. This risk could be amplified if the economic recovery falls short of expectations.
“As we are still far from reaching our inflation aim of below, but close to, 2%, a sustainable rise of inflation in the direction of 2% would be good news. That would mean that the economy is gaining momentum and aggregate demand is increasing. 2/14”
A Need For Stricter Regulation Of Funds
Ms. Schnabel cited the collapse of the US hedge fund Archegos as an example of the need for stricter regulations. The effect of the fund's collapse burned a hole in financial behemoths like Credit Suisse and Nomura.
She described it as a "remarkable" incident highlighting the problems that a lack of regulation can bring about.
Bitcoin An Oddity, Not A Currency
Ms. Schnabel also discussed bitcoin and the implications of companies like Tesla and PayPal accepting it as a payment mode. According to her understanding, bitcoin cannot be referred to as a currency.
"It is wrong to describe bitcoin as a currency because it does not fulfill the basic properties of money."
She described bitcoin as a speculative asset instead of a currency, an asset subject to wild price swings and lacking any recognizable fundamental value. She disagreed with Tesla's Elon Musk but added that he is at liberty to have his own views about the matter.
Cannot Compare The Euro With Bitcoin.
According to the ECB Executive, the comparison of the Euro with bitcoin was unfair. Throwing her total weight behind the fiat currency, she pointed out that the Euro is backed by the ECB and is accepted as legal tender, and no one can refuse to accept it.
She also stated that cryptocurrencies could lose their value completely, causing chaos in the financial markets.
“Trust in cryptocurrencies might rapidly evaporate, causing disruption in financials markets.”
Digital Euro In The Pipeline
Ms. Schnabel also opened up about plans of introducing a digital Euro. According to her, the markets have become more digitized, and financial institutions need to keep up with the pace at which the world is adopting digital technologies.
However, she pointed out that the process is in a very nascent stage, with nothing concrete decided currently. She stated that a great deal of preparatory work needs first to be completed before the project receives the green light.
Timeline Not An Issue For The Introduction Of Digital Euro
The timeline for the introduction of the digital Euro was not a major concern for the ECB. She believes that no other institution can offer security and data protection that the ECB can.
She believes that people are more likely to trust the ECB regarding data protection and privacy, which would work in its favor when the ECB launches the digital Euro.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.