Christine Lagarde used an address to the International Monetary Fund on October 17 to defend the European Central Bank's recent tightening and to push European Union legislators toward a long-delayed decision on the digital euro, warning that time is running short if the project is to stay on schedule.
The ECB raised its deposit rate twice this year, by 25 basis points each in June and September, bringing it to 2.50% as of September 16. Lagarde said inflation, which stood at 3.8% in the eurozone in September against a core reading of 2.5%, could not be judged "in isolation" from energy-driven pressures, and described the central bank's approach as "measured". Asked about the outlook for further moves, she said there was "no sign at this stage" of a shift away from the current stance. The ECB's Governing Council next meets on October 29, with its final decision of the year scheduled for December 16-17. The eurozone economy is projected to grow 0.9% in 2026 and 1.4% in 2027.
Pressure on Brussels over digital euro
Lagarde's sharpest message was directed at the European Parliament and member states rather than at markets. The European Commission proposed a regulation establishing the digital euro in June 2023, but the text has not been adopted. The Eurosystem has built its planning around a 12-month internal pilot in the second half of 2027, a timeline that depends on the regulation being adopted by the end of 2026. Lagarde called finalising the rules "essential", framing the project as a matter of European "strategic autonomy" in payments, where reliance on Visa and Mastercard infrastructure has long concerned officials in Frankfurt. She described the digital euro as intended for "coexistence" with existing private payment systems rather than as a replacement for them.
On the technical side, the ECB pointed to recent progress: its Pontes platform, which allows settlement in central bank money of transactions conducted on distributed ledgers, began operating on September 21, alongside the Appia initiative. The Eurosystem's exploratory work under EUREP has drawn interest from more than 30 foreign central banks over the past six months, Lagarde noted, as other jurisdictions weigh similar settlement arrangements.
Stability risks beyond crypto
Lagarde also used the IMF platform to flag financial stability concerns that go beyond digital currencies, citing private credit funds and the rapid adoption of artificial intelligence by financial firms as areas where risks have grown "markedly" and where vulnerabilities remain "elevated". She drew a comparison to past crypto market episodes, recalling that Bitcoin lost nearly two-thirds of its value in 2022, the same year Celsius froze customer withdrawals in June, as a reminder of how quickly leverage and concentration can turn into losses for retail holders.
For a European audience, the message combined a defence of the ECB's current rate path with a renewed deadline for lawmakers: without an adopted digital euro regulation by the end of 2026, the pilot phase planned for 2027 cannot proceed as envisaged.
