Bitcoin, Crypto currency, Blockchain

EU Parliament: Pro digital currencies, however, more sceptical about crypto-currencies

In a Report that was commissioned by the EU Parliament in order, it is about the impact of digital currencies on the European economic and financial policy. The document distinguishes explicitly between digital currencies and crypto-currencies, which the authors consider more careful. Nevertheless, the paper contributes to a positive root.

The Report is entitled “Virtual Currencies: Monetary Dialogue July 2018” provides an In-Depth Analysis of digital currencies. It was commissioned by the Committee on the economy and currencies of the European Parliament (ECON). The analysis was prepared by the staff of the Kiel Institute for the World Economy.

Digital currencies and crypto-currencies

Probably the most important statement in the report currencies, as the clear distinction and demarcation of digital currencies and Crypto. Digital currency is a General term, while a crypto-currency is a particular Form of digital currency. Crypto currencies use cryptographic functions, to authorize transactions, and verify what applies to all digital currencies. Digital currencies are characterized only by the fact that they are implemented in computer systems.

In addition, the scientists from the Kiel Institute doubt that crypto-currencies have the Potential to replace national currencies, in any way. Your doubts make them in the first place to the scaling problems with those, especially the Bitcoin-struggling network. To replace only a part of the current Fiat currencies carried out trade by Bitcoin, would explode the costs. The analysis shows, however, optimistic that you can fix the problems raised by technical developments soon.

The idea of a Central Bank of Digital Currency (CBDC)

In addition, the report also explores the possibility of a digital currency issued by a Central Bank. Such a CBDC, the analysts acknowledge disruptive Potential. So it would require the banking system in its current Constitution, if more and more market participants would keep their assets in the Form of a digital currency, to store, rather than your money in Bank accounts. Banks would have to find more reliable sources of funding than the deposits of their customers. In the long term, the Disruption could be strengthen by means of a digital currency, the financial system so even.

The bottom line is that you can hold, therefore, that the EU Parliament made the report considers the use of digital currencies as a potential enrichment. Used correctly this can be a Motor for a major modernization of the financial system. Crypto-currencies in Particular, however, this can be, according to the report, for the time being can not afford, even if a slight hope is nourished that the big stumbling blocks, such as the scaling problem can be pushed out of the way.

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