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November 20, 2019

Cryptocurrency is bad imitation of money and not the solution for a cashless society

Benoit CoeureCryptocurrency is bad imitation of money and not the solution for a cashless society. This is the opinion of one of the members of the Governing Council of the European Central Bank (ECB), Benoit Coeure. He points out that virtually no one determines prices in Bitcoin, and cryptocurrencies is rarely used as a means of payment.

Next week, there will be a meeting of G20 representatives to discuss the Bitcoin and other digital currencies based on block technology. According to Coeure, the legislators are worried about abuse of consumers and business, as well as the use of cryptocurrencies for illegal activity.

“The emergence of digital money at the moment may be a mirage, they are still at a very early stage of development, but they show that cash will not dominate forever”, said the banker. “In some Scandinavian countries, they are already beginning to limit the cash and the next generation prefers to use pay applications, so children look at the banknotes and coins as museum exhibits”, added he..

This trend is triggered by the discussion whether central banks have to issue their own digital money. But the money in their accounts is actually the money of the commercial banks.

However, in the case of the disappearance of cash, society will be entirely dependent on commercial banks, and the confidence in the currency will depend on the creditworthiness of commercial banks. Therefore, it is necessary to consider the issue of digital money from central banks. They should be user-friendly and has increased security. And in order not to be used for illegal activities, digital money should not have the same anonymity as today’s banknotes.

Or in other words – the future of money needs to be carefully considered against the backdrop of new technologies and electronic payments. It is still unclear whether central bank digital money is necessary or advisable and the answer is likely to be different for different countries.

The banker adds that despite the growing popularity of electronic payments, a non-cash society is still far away, as in many countries the demand for banknotes is still growing. But despite its shortcomings, the Bitcoin has drawn attention to one of the problems of the current monetary system – cross-border retail payments. The constraint currently stops online shopping, as well as sending money in different countries,.

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