In no uncertain terms, European Central Bank President Christine Lagarde has decreed that Bitcoin will never find its way into the vaults of an EU central bank.
In a recent statement, Lagarde pointed out that Bitcoin does not possess the defining characteristics of any reserve asset-liquidity, security, or stability.
She made the comment in response to a growing debate over Bitcoin’s potential role in national reserves after a proposal was made by a Czech central banker.
Bitcoin Fails To Meet Reserve Asset Standards: ECB
Lagarde’s rejection of Bitcoin as a reserve asset continues in light of the traditional skepticism of cryptocurrencies by the ECB. She remarked that Bitcoin remains volatile and without a central controller, making it unsuitable to be used by central banks in their reserves.
Unlike gold and government bonds whose value is safeguarded by such a central institute, Bitcoin stands out as uncertain and unreliable as an asset class during economic fluctuations, she said.
European Central Bank President Christine Lagarde says Bitcoin will not be included in any EU central bank reserves. pic.twitter.com/OH01YiG5e5
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The comments from the ECB president came in response to Czech National Bank Governor AleΕ‘ Michl, who suggested including Bitcoin in the national reserves of the Czech Republic.
Although the Czech Republic is not a eurozone country, its central bank is still represented on the General Council of the ECB, meaning that its policy debates are part of the general European financial framework.
Lagarde, however, quickly shot down the suggestion, further entrenching the cautious position of the ECB on digital assets.
The message from the ECB president echoes the viewpoint that Bitcoin could not be maintained in their vaults. Other banks of Europe do share the views of ECB of Poland; Romania also said that these cryptocurrencies will probably be kept off their official balances.
Stance Vs. Crypto
Even beyond Europe, major institutions such as the US Federal Reserve have taken a firm stance against holding Bitcoin. Fed Chair Jerome Powell had earlier said the US central bank is legally prevented from placing Bitcoin in its reserve, making the chasm between the old financial system and the currency even clearer.
Many lawmakers are hesitant about Bitcoin because they are worried about unclear regulations, its tendency to have price spikes, and its limited use for everyday transactions.
Some countries are becoming more open to Bitcoin, but most large economies still think it’s too risky to keep in their government reserves.
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Bitcoin’s Place In The Global Financial SystemDespite its rejection by central banks, Bitcoin is a major force in global finance. It has gained traction as a store of value among institutional and retail investors alike, with some even referring to it as “digital gold.”
Featured image from Sky News, chart from TradingView
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