The European Central Bank (ECB) has published a report on digital assets. The document states that cryptocurrencies do not pose a threat to the EU economy.
According to the staff of the ECB, the security of virtual currencies is due to three main reasons:
- The market share of virtual currencies in the financial system is relatively small;
- interaction between the crypto industry and other sectors of the economy is limited;
- European banks store a small number of assets in virtual currencies.
The Central Bank believes that cryptocurrencies do not perform the function of money, because a small number of commercial enterprises accept it as payment. Thus, Bitcoin (BTC) and other coins do not have a significant impact on monetary policy and the economy.
The report says that virtual currencies cannot replace fiat currency, because:
- their turnover is not regulated by the central bank;
- the asset rate is subject to a high level of volatility;
- business does not want to sell goods and services for virtual coins.
Employees of the ECB are confident that the value of digital assets can be stabilized if they are provided with reserves of the central bank. However, in this case, cryptocurrencies will lose their attractiveness for traders and the volume of trade will decrease significantly.
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The bank does not plan to issue its own virtual currency, however, it is ready to study the crypto industry and its potential. In the near future, digital assets will not be integrated into the infrastructure of the European financial market due to the fact that they cannot be used during the conclusion of transactions.
Cryptocurrency is not a security issued by a central depositary authority, so it is not suitable for mutual settlements between participants in commercial transactions. This disadvantage can be eliminated if the virtual currency is issued by the ECB, however, this will require additional costs and will not bring any benefits.
The European Central Bank’s verdict is as follows: cryptocurrencies are useless for the global financial system and do not threaten the security of the economy due to the low level of capitalization.
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