Christine Lagarde, the president of the European Central Bank (ECB), has caused a stir in the crypto community after a prank video surfaced in which she appears to admit that the upcoming digital euro would be used to control individuals’ payments. In the video, Lagarde states that “there will be control,” but it will be limited, with the ECB considering a mechanism for small, zero-control transactions.
However, Lagarde also raised concerns over the potential dangers of such transactions, citing the financing of terrorist attacks as an example. She argued that the digital euro would help Europe maintain its sovereignty and not be dependent on the currencies of unfriendly countries or private corporations such as Facebook or Google.
Lagarde’s comments on the digital euro come amid growing concerns about the rise of cryptocurrencies and their impact on the traditional banking system. In September 2022, she claimed that crypto assets were “worth nothing” and could hinder the role of central banks as an “anchor” of the economy. Lagarde has called for greater oversight of the crypto industry.
Meanwhile, the ECB has been making progress towards the introduction of the digital euro, with plans to prioritize e-commerce and person-to-person payments during the first phase of the CBDC release, followed by other contexts in the second phase.
Speculation has also been mounting that the recent banking crisis in the United States was a ploy to accelerate the adoption of CBDCs. Nic Carter, the General Partner at Castle Island Ventures, argued that the turmoil strengthened “the political case for CBDCs” as “no one trusts commercial banks” anymore.
The potential implementation of a CBDC raises questions about the future of the crypto sector and its place in the metaverse. As central banks begin to roll out their own digital currencies, it remains to be seen how the market will respond and adapt. Some believe that CBDCs could provide a more stable alternative to volatile cryptocurrencies, while others worry about the implications of increased government control over financial transactions.