The European Central Bank (ECB) president Mario Draghi had a few negative words for Bitcoin and other cryptocurrencies during the ECB Youth Dialogue meeting with the winners of the Generation Euro Students’ Award.
When asked by one of the winners what the ECB’s stance is on Bitcoin and cryptocurrencies, Draghi dismissed their status as actual currencies and played down their impact on the present economy. According to Draghi:
"Cryptocurrencies, Bitcoin and such things are not real currencies: they are assets. One euro is one euro, today, tomorrow or in a month: it will always be one euro — and the ECB is behind the euro."
Draghi’s statement that one euro will always equal to one euro likely alludes to the currency’s reputation as a medium of exchange. This is entirely true, just as one bitcoin will always equal one bitcoin.
However, money has another important role to fulfill — that of a store of value. Currently, all fiat currencies that exist, including the Euro, have proven to be inflationary, slowly diminishing the purchasing power of their holders.
This was also one of the reasons why Bitcoin (BTC) was conceived — to implement a currency that is reliably deflationary and fulfills the role of a store of value.
Draghi also believes that the current size of the crypto market isn't sufficiently large for central banks to get involved with the process of regulation. The ECB president believes that right now any regulation of the space should be done with a view on consumer or investor protection.
"I would say that it is more something that falls within the field of consumer protection. We want to ensure that buyers of these assets know what they are doing, and are aware of the risks.:
Several national central banks have recently been discussing the idea of creating a digital version of their fiat currency. The European Central Bank seemingly does not see any benefits of using blockchain technology, having dismissed any plans to do something similar for the European Union with a euro-based digital currency.
What do you think of Draghi's comments? Share your thoughts in the comments below!
Images courtesy of Shutterstock, Twitter.