ECB Has No Plans to Issue Digital CurrencyAdam Gardiner
While cryptocurrencies have become more and more popular with consumers and investors, even governments are starting to get in on the action. By now everyone is familiar with Venezuela’s petro, and with Iran’s attempts to create its own cryptocurrency. Even larger countries such as India are exploring the possibility of issuing their own cryptocurrencies, and the Chinese government is widely suspected of researching the feasibility of a Chinese cryptocurrency. But one government that won’t be issuing a cryptocurrency any time soon is that of the European Union.
According to European Central Bank (ECB) President Mario Draghi, the ECB sees no need to issue a cryptocurrency version of the euro. For one thing, according to Draghi, cryptocurrency technology still lacks the robustness needed to allow a central bank digital currency to be developed. Also working against an EU digital currency is the fact that physical cash use across the eurozone is still significant, particularly in Germany, so adoption of digital currency would be difficult.
According to the ECB’s research, nearly 80 percent of all point of sale transactions within the eurozone were made with cash, versus only 19 percent for credit and debit cards. That’s a far lower percentage than in places such as Sweden, which is famous for virtually eliminating cash, and the United States, where usage of credit cards and other forms of electronic payments is far more established.
Of course, the fact that the ECB won’t issue a digital currency any time soon isn’t necessarily a bad thing from the perspective of consumers, as it’s doubtful whether consumers would even use such a currency. The reason Bitcoin and other cryptocurrencies were developed was precisely because central banks couldn’t be trusted not to inflate their currencies into oblivion. The fact that Bitcoin’s supply is strictly limited is precisely the reason it has become one of the most popular cryptocurrencies for IRA investors. Unless and until central banks and national governments get serious about limiting the issuance of their currencies, there’s no reason to believe that national cryptocurrencies will ever supplant Bitcoin.