European Central Bank Denies Any Need To Launch Digital Currency

As cryptocurrencies continue to penetrate the global financial market, some central banking institutions are giving a shot to it. In addition to facilitating instant and low-cost cross-border payments, digital assets also help towards moving for a cashless economy.

However, in a latest report from Reuters, the European Central Bank president Mario Draghi says that they are not considering to launch a digital currency anytime soon. The ECB president said that the technology supporting digital currencies aka blockchain is still movie and fragile, and more importantly the use of physical cash is still in high-demand in the eurozone.

There is no doubt to it that blockchain provides a revolutionary alternative to the existing banking systems. However, blockchain still being in the early stages of development, it is not robust enough to handle millions of users worldwide.

In his letter to the member of European Parliament MEP Jonás Fernández, Draghi wrote: “The ECB and the Eurosystem currently have no plans to issue a central bank digital currency. Nonetheless, we are carefully analysing the potential consequences of issuing such a currency as a complement to cash.”

While commenting on the technology supporting digital currencies, Draghi wrote: “...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 further added: “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.”

After the launch of Bitcoin futures last year in December 2017, Draghi expressed some interest in the product saying that the ECB could hold some position in the bitcoin investment product. He said: “…., recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in Bitcoin, and therefore we will certainly look at that.”