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Christine Lagarde, a nominee to take over the next president of the European Central Bank (ECB), said that central banks and financial institutions should continue to protect consumers but keep an open mind to innovations like cryptocurrencies.
Speaking at the Economic and Monetary Affairs Committee of the European Parliament, Lagarde said that central banks and financial regulators should embrace opportunities presented by cryptocurrencies as a change in the right direction.
“In the case of new technologies – including digital currencies – that means being alert to risks in terms of financial stability, privacy or criminal activities, and ensuring appropriate regulation is in place to steer technology towards the public good. But it also means recognising the wider social benefits from innovation and allowing them space to develop,” Lagarde, who is the current head of the International Monetary Fund, said.
She further noted that the “crosswinds” of change will oblige central banks to collaborate and prepare for the future by sharing information and expertise. It will also require moving out of the echo chamber and listening to a diverse range of groups.
“There is much we can learn from those who see the different aspects of monetary policy in their daily lives, be they trade unions, consumer groups, NGOs or other civil society partners. Beyond the regular accountability hearings in front of this assembly, listening to their voices can only make the ECB’s policymaking stronger,” she said.
Lagarde is committed to ensuring that institutions properly adapt to the rapid changes in the financial environment if she becomes the president of the ECB.
The speech comes after ECB executive board member Yves Mersch warned that Facebook’s Libra cryptocurrency is posing a threat to monetary policy and called it “beguiling but treacherous.” He noted that private currencies have little or no prospect of establishing themselves as viable alternatives to centrally issued legal tenders.
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