In an interview with Dutch television, ECB President Christine Lagarde spoke out in favor of regulating cryptocurrencies to discourage people from speculating on them with their savings. She said she’s concerned for people “who don’t understand the risks, who will lose everything and be terribly disappointed, which is why I believe this should be regulated”.
Cryptocurrencies are “worth nothing,” Lagarde said. They are based on nothing and there is “no underlying asset that acts as a safety anchor”. Bitcoin expert Niko Jilch classified Lagarde’s statements for WELT.
WORLD: Mr. Jilch, ECB President Christine Lagarde has spoken out in favor of regulating cryptocurrencies and considers them “worth nothing”. In fact, Bitcoin and Co. have lost a lot of value in the past few months. Is Lagarde using the moment to disavow money that competes with paper currencies – or is the warning justified?
Niko Jilch: It is important to distinguish between Bitcoin and “crypto” – these are basically two different things. Bitcoin is a new money system that manages itself and runs according to its own rules. “Crypto” are often companies disguised as decentralized systems that hide behind constructs and yes, often rip people off. So as for Ethereum, Solana, Cardano or most recently Luna, I would agree with Lagarde – there is nothing behind it. Promises are made that are not kept. They are basically extremely risky venture capital investments.
WORLD: And Bitcoin is different?
Jilch: It is decentralized and has a clear benefit as an open monetary system. I don’t get the impression that Lagarde understood the importance of Bitcoin. She doesn’t have to. You just have to scare us so that we accept the digital euro as an “alternative” when it comes along. The digital euro is the opposite of Bitcoin.
WORLD: This will surprise many who have so far regarded the digital euro as an officially approved Bitcoin alternative.
Jilch: That’s how people like to sell it, but of course it’s not. The digital euro is centralized, its future and monetary policy are uncertain and decided by a council, just like the analogue euro. With Bitcoin, all of this is transparent and stipulated. The digital euro will also not be as open as bitcoin. But most importantly, it won’t protect our privacy like cash is currently doing. Unfortunately, it is another step towards surveillance – which is why many are against it.
WORLD: Do you have the impression that Ms. Lagarde would distinguish between Bitcoin and other cryptocurrencies in her criticism?
Jilch: No, absolutely not. It sees everything as a “crypto sector,” which is just plain wrong. In truth, we are dealing with an original and 10,000 imitators who would like to be like the original, but at the same time pretend to be even better.
WORLD: Lagarde is in favor of regulating cryptocurrencies in order, as she says, to prevent people from speculating with their savings. During her tenure so far, one did not get the impression that the fate of savers was important to Lagarde. How credible is the justification for your claim?
Jilch: The question describes the problem very well. Lagarde said we should worry less about our savings and be happy when we have a job. As if that was thanks to her. That’s actually an insult. If the central banks did not dilute the value of money at every opportunity, speculation – regardless of the asset class – would not be as intense. ECB monetary policy is to blame for speculation, not “crypto” – that’s just a symptom. But again, it’s extremely dangerous and I would advise against anyone investing their money there. If digital money, then Bitcoin – and only very carefully and slowly.
Niko Jilch is a financial journalist, podcaster and YouTuber with a focus on Bitcoin and the monetary system. He lives and works in Vienna. The interview with him was conducted in writing.
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