European Central Bank President Christine Lagarde has stated that Cryptocurrencies are “worth nothing”. According to her, there are no underlying assets or value attached to these so called cryptocurrencies.
Ms. Lagarde was participating in an interview in a talk show named “College Tour”. She expressed her concern that people investing in cryptocurrencies which are not backed by any assets are going to lose everything.
She cited recent collapse of Terra USD which has turned zero in value. It is also to be noted that Bitcoin which is most popular of all of thousands of cryptocurrencies being traded has lost almost half of its value in a year.
Talking about cryptocurrencies, Ms Christine Lagarde said, “There is no underlying asset to act as an anchor of safety.” She, in the interview, used the opportunity to ask the policy makers and regulators around the world to make laws and rules to regulate the cryptocurrencies so that gullible and unsuspecting people can be protected from financial and other losses.
Interestingly, Ms. Christine Lagarde, while serving as Managing Director of IMF (International Monetary Fund) in 2017 had spoken very favorably about virtual currencies including Bitcoin. She had even hinted about possibility of launching IMF’s own virtual currency a la IMFCoin.
Thereafter, though she had in another address she had warned of various risks involved in cryptocurrencies such as relating to financial integrity, financial stability, innovation etc.
In another development however, the current Managing Director of IMF, Kristalina Georgieva, during WEF discussions in Davos, has advised people not to abandon cryptocurrencies altogether despite loss caused to investors due to collapse of Terra USD. Kristalina Georgieva also asked for regulation in crypto field. She opined that major reason of loss in Terra USD was that it was not backed by any real cash or assets.
On the similar lines, the former MD of IMF and current President of ECB, Ms. Christine Lagarde has also said that private virtual currencies have inherent risks of failure due to lack of any underlying assets or value. That is why she has stated that these cryptocurrencies are worth nothing.
