The European Central Bank (ECB) is not issuing a digital currency any time soon, according to President Mario Draghi.
He’s argued that the blockchain technology is not mature enough for such a level of responsibility and physical cash remains widely used within the monetary union.
ECB Studies Potential Issuance of Central Bank Digital Currency
In a letter sent to Mr. Jonás Fernández, Member of the European Parliament, ECB President Mario Draghi said the central bank is analyzing the consequences of issuing a Central Bank Digital Currency and explained why there are no plans to launch one.
“First, the technologies which could potentially be used to issue a central bank digital currency, such as distributed ledger, have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context.”
In 2016, the use of physical cash within the Euro monetary system accounted for 79 percent of all payments at point of sale and for 54 percent of the total value of those transactions. Non-cash payments have grown 7.9 percent in 2017, according to ECB research.
A number of countries have announced their plans to launch national cryptocurrencies or already conducted initial coin offerings (ICOs) to introduce a state-backed digital token.
In late February, Venezuela launched Petro, an oil-backed currency, which was automatically banned by the United States. Iran followed suit and announced it will “implement the country’s first cloud-based digital currency” to counter the international sanctions it faces ever since U.S. President Trump exited the nuclear deal.
China is also moving towards the launch of a national cryptocurrency, although the country is known to have a very strict policy regarding cryptocurrency trading. In June, Russian Central Bank’s Deputy Chair Olga Skorobogatova said: “regulators of all countries agree that it’s time to develop national cryptocurrencies, this is the future.”
Coincidentally or not, most countries who have announced national cryptocurrencies are run by authoritarian governments not keen on transparency. In June, Bitcoin developer Peter Todd explained that all currencies are digital nowadays and “cryptocurrency is not about being able to move money digitally, it’s about auditing.”
“In the case of decentralised cryptocurrency, it’s about the ability to move money and audit it without permission. But when you’re talking about a government currency, obviously there’s permission, a central authority and control — end of story.”
The issuance of Central Bank Digital Currencies is not exclusive to countries in tense relationships with the United States. Sweden is considering the issuance of an electronic version of its currency, called e-krona, while the Bank of England has published a paper on the matter.
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