Christine Lagarde, the candidate to succeed the next ECB president, said central banks and financial institutions should continue to protect consumers but remain open to innovations such as cryptocurrencies.
Speaking on the European Parliament’s Economic and Monetary Affairs Committee, Ms. Lagarde said central banks and financial regulators should see the opportunities offered by cryptocurrencies as a change in the right direction. “For new technologies – including digital currencies – this means being alert to risks in financial stability, privacy or criminal activity and ensuring that appropriate regulatory measures are in place to steer technology towards the public interest.” But it also means recognizing the broader social benefits of innovation and allowing them to grow,” said Lagarde, who is now head of the International Monetary Fund.
She further noted that the “headwinds” of change would force central banks to work together and prepare for the future by sharing information and expertise.
It also needs to move out of the echo chamber and listen to a wide variety of groups. “We can learn a lot from those who see different aspects of monetary policy in their daily lives, whether they are trade unions, consumer groups, non-governmental organizations or other civil society partners.
In addition to the regular accountability hearings held before this session, listening to their voices will only make ECB policy-making stronger,” she said.
Ms. Lagarde is committed to ensuring that institutions are properly adapted to the rapid changes in the financial environment when she becomes president of the European Central Bank.
Yves Mersch, a member of the ECB’s executive committee, warned that Facebook’s Libra cryptocurrency was posing a threat to monetary policy and called it “deceptive but treacherous.” He points out that private currencies have little or no prospects for positioning themselves as viable alternatives to a centralized offering legal tender.