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Stablecoins Beat Bitcoin, Says ECB Presidential Hopeful

Francois Villeroy de Galhau of the European Central Bank (ECB) says stablecoins hold more promise than Bitcoin. The ECB policymaker says fiat-pegged crypto will have a place in the legacy financial system.

We Prefer Fiat-Pegged Crypto

According to Bloomberg, Villeroy believes that cryptocurrencies pegged to fiat will be the ones to experience greater utility within the mainstream finance apparatus. Speaking in Paris on Tuesday (May 14, 2019), Villeroy, a frontrunner for the ECB Presidential seat opined:

The Bank of France is “observing with great interest initiatives in the private sector which aim at developing networks within which ‘stable coins’ would be used in transactions involving ‘tokenized’ securities or goods and services.” These are quite different from speculative assets like bitcoins, and more promising.

Of Course, Central Bankers Prefer Stablecoins to Bitcoin

Villeroy’s comments should come as no surprise as bankers haven’t hidden their dislike for Bitcoin and its ability to disrupt their stranglehold on global finance. The disintermediation of the payments system is in many ways an attack on their bottom-line.

Answering questions during the ECB Youth Dialogue on Wednesday (May 8, 2019), ECB President Mario Draghi described Bitcoin as not being a “real currency” but more like an asset, saying:

A euro is a euro – today, tomorrow, in a month, it’s always a euro. And the ECB is behind the euro. Who is behind the cryptocurrencies?

Draghi fails to mention that questionable monetary and fiscal policies which are often political have a negative impact on the purchasing power of fiat currency. One BTC will always be worth one BTC.

In February 2019, the U.S. Federal Reserve did a complete 180 reportedly under duress from the White House to adopt a more dovish stance. Several commentators say quantitative easing and negative interest rates will put the mainstream market on the path of another major collapse.

$2,000 in Less than Five Days

While uncertainty reigns in the mainstream market, Bitcoin continues to rise even higher, adding more than $2,000 in price value in less than a week. BTC is up more than 120 percent since the start of 2019.

This recent parabolic advance has coincided with renewed institutional interest from brokerage giants and investment firms alike. TD Ameritrade, Fidelity Investments, and E-Trade plan to debut BTC trading for institutional clients.

Bakkt on Monday (May 13, 2019) announced that it would begin testing its physically-settled BTC futures contract in the summer. The company also says it is close to obtaining the green light from the U.S. Commodity Futures Trading Commission (CFTC).

Do you agree that the banking class is running scared of Bitcoin? Let us know your thoughts in the comments below.

Images via Twitter @ecb,

The Rundown

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Mario Draghi: Europe ‘Has No Plans to Issue Central Bank Digital Currency’

The European Central Bank has no intentions of issuing a central bank digital currency. According to its president Mario Draghi, the current economic conditions fail to justify a need for it. 

Cash Remains King

Speaking in front of the European Parliament, the president of the European Central Bank Mario Draghi touched on the matter of cryptocurrencies and whether or not the European Union needs a central bank digital currency.

He outlined a few reasons for why the ECB “has no plans” to issue a unified digital currency.

First off, according to Draghi, “distributed ledgers have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context.”

The president of the bank also noted that a state-run cryptocurrency will put the private banking sector and Central Banks in direct competition:

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.

However, despite explaining that cryptocurrencies could, in fact, help institutions “meet demands for both the security and digitalization of the economy… (and) could also allow monetary policy to reach a wider range of economic actors more directly,” Draghi also outlined that:

The demand for euro banknotes continues to grow, and cash remains a popular means of payment.


Others Disagree

While the ECB may have no immediate plans for a state-run cryptocurrency, other countries have already taken the opposite approach.

Bitcoinist reported July 27 that Iran is considering its very own state-issued cryptocurrencies as the country is set to come under renewed sanctions on behalf of the US.

On the other hand, Venezuela, which is currently torn by hyperinflation, decreed the cryptocurrency Petro as an official legal tender. However, numerous reports have since outlined that the usage of said statewide digital currency borders on non-existent.

Do you think the EU needs its own ECB-sanctioned cryptocurrency? Don’t hesitate to let us know in the comments below! 

Images courtesy of Shutterstock.

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ECB Has No Plans to Launch Digital Currency Due to Blockchain Immaturity

The European Central Bank (ECB) is not issuing a digital currency any time soon, according to President Mario Draghi.

He’s argued that the blockchain technology is not mature enough for such a level of responsibility and physical cash remains widely used within the monetary union.

ECB Studies Potential Issuance of Central Bank Digital Currency

In a letter sent to Mr. Jonás Fernández, Member of the European Parliament, ECB President Mario Draghi said the central bank is analyzing the consequences of issuing a Central Bank Digital Currency and explained why there are no plans to launch one.

“First, the technologies which could potentially be used to issue a central bank digital currency, such as distributed ledger, have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context.”

In 2016, the use of physical cash within the Euro monetary system accounted for 79 percent of all payments at point of sale and for 54 percent of the total value of those transactions. Non-cash payments have grown 7.9 percent in 2017, according to ECB research.

A number of countries have announced their plans to launch national cryptocurrencies or already conducted initial coin offerings (ICOs) to introduce a state-backed digital token.

In late February, Venezuela launched Petro, an oil-backed currency, which was automatically banned by the United States. Iran followed suit and announced it will “implement the country’s first cloud-based digital currency” to counter the international sanctions it faces ever since U.S. President Trump exited the nuclear deal.

China is also moving towards the launch of a national cryptocurrency, although the country is known to have a very strict policy regarding cryptocurrency trading. In June, Russian Central Bank’s Deputy Chair Olga Skorobogatova said: “regulators of all countries agree that it’s time to develop national cryptocurrencies, this is the future.”

Coincidentally or not, most countries who have announced national cryptocurrencies are run by authoritarian governments not keen on transparency. In June, Bitcoin developer Peter Todd explained that all currencies are digital nowadays and “cryptocurrency is not about being able to move money digitally, it’s about auditing.”

“In the case of decentralised cryptocurrency, it’s about the ability to move money and audit it without permission. But when you’re talking about a government currency, obviously there’s permission, a central authority and control — end of story.”

The issuance of Central Bank Digital Currencies is not exclusive to countries in tense relationships with the United States. Sweden is considering the issuance of an electronic version of its currency, called e-krona, while the Bank of England has published a paper on the matter.

Featured image from Shutterstock.