The European Central Bank will not be able to deal with crypto currencies anytime soon. Her President Mario Draghi rejected all hopes for a digital currency approved by the EU, criticising the technology as too young and unstable to be used.
“The ECB and the European financial ecosystem currently have no plans to launch a centralised digital currency,” Draghi said at a hearing in the European Parliament. He then stated that the block-chain “requires further substantial development”, so he sees no “specific need” for Europe to develop an official digital currency.
The supporters of a block-chain technology often cite the state financial system as a basic example of the use of crypto currencies like bitcoin. Indeed, the central banks of several countries are already flirting with the idea of the issuing of crypto currency. These are Venezuela, Sweden, Thailand and the Marshall Islands. At the same time, most of their plans are seriously criticised both in the media and by the International Monetary Fund.
It is obvious that Draghi also sees no reason why the EU should follow these countries in the adoption of a digital currency. He is not even convinced that there is a market need for this. In its speech, he draws attention to the fact that cash payments in the euro area remain a fundamental and stable means of payment.
More precise judgement shows that Draghi has a point. The thesis that crypto currencies are successful in the fight against inflation has been recently criticized by economists. Moreover, EU regulations have not yet clearly defined the legal dimensions of the block-chain technology. So-called Initial Coin Offerings (ICO) has so far been operating in the grey zone of the legal area for which experts are worried that it has the potential to collapse the entire financial sector.
In the end, Draghi’s opinion about the future of crypto currencies appears to be pretty reasonable in its scepticism and difficult to prove wrong at this stage.
