„Unthinkable“ – ECB chief rules out bitcoin purchases by central banks
Christine Lagarde thinks it is „very unlikely“ that central banks will get in on the Bitcoin hype.
The head of the European Central Bank (ECB) calls it „unthinkable“ that Bitcoin Lifestyle central banks will hold Bitcoin (BTC) as a reserve currency in the near future.
Christine Lagarde made the relevant remarks on 10 February in a conference call with the business newspaper The Economist.
„It’s very unlikely, I would even say it’s unthinkable,“ the ECB chief said in reference to possible bitcoin investments by central banks.
Lagarde, however, is known for her criticism of the market-leading cryptocurrency, which may not be without ulterior motives, as Bitcoin is flourishing just at a time when the ECB is printing masses of new money to keep the European economy afloat in times of Corona crisis.
Probably no coincidence, because this strategy has an unintended side effect that plays into Bitcoin’s favour. A thesis that is also supported by Saifedean Ammous. As the author of the book „The Bitcoin Standard“ writes in a tweet, the ECB is currently „doing its best“ to promote the crypto market leader.
In this regard, he refers to a recent interview with a member of the ECB’s Governing Council, who holds out the prospect of possible punitive interest rates for savers in the event of the introduction of a digital euro.
The central banker in question, Fabio Panetta, argues that otherwise, during the next economic crisis, European citizens might abruptly withdraw their savings from private banks and deposit them directly with the ECB. With the „penalty interest rate“, he wants to create a mechanism to counteract this if necessary.
„In times of crisis, for example, it might be necessary to adjust the value of a digital currency, but in doing so the central bank would at the same time signal that it anticipates imminent problems for the financial system, which in turn would become a self-fulfilling prophecy,“ as he himself recognises the problems of his own idea, however.
Savers will be asked to pay
Ironically, then, to protect the banks, those who make banking relevant in the first place by depositing their savings would have to be punished.
As Panetta explains to Bloomberg, 2% penalty interest on savings in the form of the digital euro would probably not be enough to avoid a so-called „banking storm“. Accordingly, „large penalties“ would be needed, based on the size of the savings deposited with the ECB.
Bitcoin investors can only smile wearily at these plans, because the market-leading cryptocurrency already makes saving more worthwhile than at traditional banks.
„The ECB is doing its best to highlight and promote the added value of Bitcoin,“ as Ammous therefore concludes.
This is not the first time the European Central Bank has inadvertently promoted a currency it cannot control.
As we has reported, ECB members have unintentionally pointed out many times in the past that the euro has significant weaknesses compared to Bitcoin.
Although a digital euro is slowly taking shape, it is estimated that it will take at least four years before it is introduced. This means that the Europeans are lagging far behind the Chinese in particular, who are getting closer and closer to introducing the digital yuan.