European Central Bank: cryptocurrency can replace the Euro and other currencies

The main bank regulator of the European Union sees the prospects behind the stablockies supported by reserves.

The European Central Bank issued a report on the impact of digital assets on the financial stability of 19 eurozone countries.

In the section “Potential implications for monetary policy,” analysts of the regulator note that the situation may be such that cryptocurrency will begin to perform all the functions that the euro currently performs – the eurozone's common currency. So far this is not observed, and therefore cryptocurrencies "do not have a serious impact on the real economy," and therefore do not have "significant consequences for the monetary policy pursued."

At the same time, in the future a fracture may occur when digital assets on the blockchain will be perceived as a more interesting store of value than deposits in European banks. Analysts at the ECB note that the policy of negative base interest rates has led to the fact that the profitability of deposits is currently also mostly negative, if we take into account inflation in the eurozone.

In such a situation, it is obvious that cryptocurrency prices that are growing from year to year can begin to attract the attention of Europeans and European companies as an alternative to bank deposits.

While this is not observed, since "cryptocurrencies currently have high volatility." In addition, analysts believe that an obstacle to the spread of cryptocurrency is the fact that they do not have the support of the ECB, and are not so often used in commodity relations.

The ECB believes that the potential first cryptocurrencies that will get really big circulation will be algorithmic steklokoiny, that is, digital assets that are backed by a basket of currencies or other digital assets. The management of such a basket as an investment portfolio will be focused on achieving a stable exchange rate as a result.

The ECB has especially great prospects associated with such stablebcoins who will receive reinforcements at the expense of the reserves of this or that central bank. Such a cryptocurrency with a high degree of probability will be very popular.

The ECB's conclusion contrasts with what was stated in a recent study by the CBR: the Russian mega-regulator noted that people have a high propensity to prefer cash because of their special properties.

Publication date 19/05/2019
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