The latest report of Virtual Currencies, Monetary Dialogue, July 2018, expresses that the Europian Parliament's Economic and Monetary Affairs Committee is found to be in support of digital currencies, but not cryptocurrencies.

In its clarification, they said that cryptocurrencies use cryptographic functions for the process of verifying and authorizing transactions whereas digital currencies are the ones that are implemented on computer systems. In addition to this, the authors also believe that cryptocurrencies like Bitcoin cannot replace the traditional currencies to any significant level as the technology is still facing issues of scalability. Specifically, it would be highly expensive to lead any transaction of fiat through cryptocurrencies.

The report also mentions that cryptocurrencies have just been a vehicle for financial speculation rather than as a medium of exchange which attracts the speculators for high returns.

Also, for the Initial Coin Offerings, the report cites:



"The recent flood of ICOs contains a large number of highly questionable proposals that do not

pass muster under traditional due diligence"

Hence, the investors are cautioned about the high risks involved in any ICO and also reminds issuers to check whether they fulfill all of their legal obligations, for example in case their conduct constitutes the placement of financial instruments



However, Central Bank Digital Currencies has voted to allow the public to access the central bank money in the non-tangible form and offers free convertibility of CBDC units to cash at 1:1 rate to maintain the price stability. The central bank will be responsible for authorizing and verifying the transactions.

With this initiative of Central bank, it is highly likely for the commercial banks to lose the ability to attract deposits. Deposits being the key source of funding for the banks, it would draw a challenge to the reserve banking system if a majority of the customers and businesses would opt for CBDC to hold their liquidity.

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