President of European Central Bank Worried Bitcoin Is "Shaking The System"
In a letter issued by the President of the European Central Bank (ECB), President Mario Draghi, has confirmed that the ECB and the Eurosystem currently have “no plans” to issue its digital currency under current unmet conditions.
Addressing the European Parliament on Wednesday, September 12, 2018, Draghi said: “substantial development” was still needed in the basic technology supporting cryptocurrencies before the Central Bank would consider using them.
His statement reads in part:
“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency.
Nonetheless, we are carefully analyzing the potential consequences of issuing such a currency as a complement to cash.”
No EU Token
Explaining why the ECB sees no need for an EU digital currency, Draghi drew attention to the need for further research and the growing demand for cash.
According to the report, before the Central Bank can issue digital currencies, digital technologies that would power them needs to be “thoroughly tested” and developed.
“…The technologies which could potentially be used to issue a central bank digital currency […] have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context,” he told Jonás Fernández, a Member of the European Parliament.
Draghi went further to add:
“With regard to the central bank administering individual accounts for households and companies, this would imply that the central bank would enter into competition for retail deposits with the banking sector and lead to potentially substantial operational costs and risks.”
In contrast to actions taken by countries like Russia and China, Draghi maintains the cautious position that the 28-member bloc has traditionally held on fiat.
More so, the ECB and Bank for International Settlements (BIS) emphasized the risks of a likely launch of the digital currency in a joint report that was released earlier this year, advocating for thorough research before launch.
As the demand for euro banknotes continues to grow, and cash remains a widespread means of payment in the EU28.
Besides, there is an increasing range of options for digital payments that allows noncash transactions to be completed almost as immediately as cash transactions.
To this effect, the development will be aided by the TARGET instant payment settlement (TIPS) service, which will be carried out from November 2018, and permit payments to be settled in central bank money 24/7 on a pan-European basis.
Based in the UK, Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.
Follow him on Twitter: @adejimi