European Central Bank: “Bitcoin does not fulfil the functions of money”
Home News European Central Bank: “Bitcoin does not fulfil the functions of money”
Marcel Knobloch –
The European Central Bank (ECB), which is responsible for the management of the monetary policy of the countries of the Eurozone have currencies, a report on Crypto and its impact on financial stability, monetary policy and the payments released.
Mario Draghi, the President of the ECB, has recently spoken about digital assets, and declares that they pose no risks to financial stability.
The now published document seems to explain in Detail what has been said by Mario Draghi recently about crypto-currencies. Under the section “Possible effects on monetary policy” the ECB, Bitcoin[BTC], and other cryptographic currencies at present, “the functions of money meet”. The ECB also noted that digital currencies do not have “a noticeable impact on the real economy”, and that they have no “substantial impact on the monetary policy”. The Bank mentioned, however, that this Situation could change if crypto-currencies as a “credible would be considered Substitutes for currency and deposits”.
At the same time, it is mentioned that there are a small number of traders, the Bitcoin as payment and use it for their Goods and services to accept. This means that you have no influence on the “pricing” and not be accepted worldwide. In addition, the volatility of the crypto aggravating currencies and the Lack of a Central Bank hedging, Bitcoin and crypto currencies is the fulfillment of the characteristics of a monetary asset in the near future. In this connection, it is stated in the report:
The high volatility of the crypto-Assets, the Lack of support by the Central Bank and the limited acceptance merchants to prevent crypto-Assets are currently used as replacement for cash and deposits, and make it the crypto-Assays are very difficult to meet the characteristics of a monetary asset in the near future.
In addition, the ECB noted that the Bitcoin[BTC] and other crypto-currencies “effectively cash and deposits compete,” and noted that its “impact on the economic development and monetary policy are similar to those of other asset markets”. The report explained the reason for the limited “link with the wider financial system,” and the small size of the cryptographic insurance.
In addition, it was,in the report on the impact of stable coins, how to Tether entered on the monetary policy
In this context, it remains to be seen whether algorithmic Stablecoins can actually provide the very significant reduction in price volatility would require a broader application. In contrast, stable coins might be less volatile if the coins would, for example, backed by Central Bank reserves.
The Bank further argued that the stable coins, which are covered by Central Bank reserves, “might lead to an additional demand,” according to these reserves, which would have implications for monetary policy. The Bank said, but also “are those secured stable coins, no crypto-Assets”.
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