Bitcoin is not suitable for ECB reserves, according to ECB President Christine Lagarde

Christine Lagarde, the President of the European Central Bank (ECB), reiterated her stance that Bitcoin is not suitable for use as a reserve asset. Despite the growing trend of sovereign entities and institutional investors exploring Bitcoin as a potential hedge against inflation, Lagarde maintained her skepticism during a media conference on January 30.

She stated that she is confident that Bitcoin will not be considered by any of the central banks within the General Council of the ECB. Lagarde’s objections to Bitcoin are well-known, and she has consistently criticized the cryptocurrency for its speculative nature, liquidity constraints, and regulatory uncertainties.

Furthermore, Lagarde raised concerns about Bitcoin’s association with illicit activities. She argued that Bitcoin could serve as a vehicle for money laundering and other criminal actions, which she believes disqualifies it from being a suitable reserve asset. According to Lagarde, central bank reserves should meet certain criteria: they must be liquid, secure, and safe, without being tainted by the suspicion of illicit use.

Lagarde’s comments reaffirmed the ECB’s position against Bitcoin in the context of central bank reserves. However, it’s worth noting that not all parts of Europe share her view. For instance, banks in Norway and Switzerland have shown some degree of interest in Bitcoin exposure through investments in companies like MicroStrategy, which holds Bitcoin on its balance sheet. While these investments do not equate to direct Bitcoin reserves, they do signal a growing appetite for Bitcoin in some financial sectors.

Despite the ECB’s position, the debate over Bitcoin as a reserve asset continues to evolve globally, with some sovereign entities and financial institutions exploring its potential as part of their diversification strategies.