Christine Lagarde is the president of the European Central Bank. She was recently speaking on her financial policies on a talk show called Late Late Show.
During her interview, she remarked that the ECB had to increase interest rates to contain inflation. She further explained that the ongoing inflation was created out of thin air.
On the other hand, she exclaimed that the current inflation was caused by Russian President Vladimir Putin. She claimed that due to the Russian war, there is a severe energy crisis that has given rise to inflation. However, her remark enticed a negative response from the members of international cryptocurrency members.
ECB Continues to Increase Interest Rates
The ECB raised the interest rates by 75 additional points just one day before her interview. To this effect, the total growth of interest rates has reached 2%, which is the highest since 2009.
As per the latest estimates, the ECB can continue to increase rates. The Governing Council has estimated an additional issuance of interest rates projected at 2%.
There are EU nations like Latvia, Estonia, and Lithuania where the inflation increase has been recorded as high as 24%. Meanwhile, in EU nations, the average inflation rates have exceeded 9%, which is considered to be the highest in the last 20 years.
Cryptocurrency investors claim that the current economic downturn is on account of financial mismanagement by Central Banks such as the ECB.
The monetary policies of the ECB have been questioned by the local and international community time and again. The ECB reserves in October were valued at 9 trillion euros. However, before the pandemic, the total reserves were valued at 4.75 trillion euros. The Central bank has more than tripled the money supply during that duration.
Before the pandemic, there were 8.5 trillion euros in circulation; on the other hand, after the pandemic, there are 11.7 trillion euros in public supply. This indicates an increase of 37.6% in euro supply between 2019 and 2022.
Therefore, people have been compelled to lean on alternatives such as Bitcoin and other altcoins. Crypto proponents point out that the current inflation is not on account of the Ukraine war or COVID but rather the massive inflow of money by the ECB.