There have been several speculations going around in the cryptocurrency ecosystem that the European Central Bank (ECB) might be considering issuing a state-backed virtual currency, in the wake of this, the ECB has come public to announce that it has “no plans” to issue its own digital currency. This was recently revealed by President Mario Draghi while sharing his view with the European parliament.
ECB Considering a State-Backed Crypto?
While President Mario Draghi was responding to a query by Jonás Fernández who is a Member of the European Parliament, he stated that “substantial development” is needed in the bedrock technology of cryptocurrencies (which is the blockchain) before ECB can give its adoption a second thought. He then expressly announced that;
“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency.”
However, the President also shared with the parliament that the bank has been considering a way of complementing its fiat currency saying; “Nonetheless, we are carefully analysing the potential consequences of issuing such a currency as a complement to cash.”
He, therefore, gave a rather comprehensive explanation of the reason why there is practically no plan to engage the blockchain technology or issue tokens stating that;
“The technologies which could potentially be used to issue a central bank digital currency…have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context”
Another concrete reason given by the President of ECB is that the apex bank would delve into commercial transaction and descend to bank status he responded to Fernández, adding that:
“With regard to the central bank administering individual accounts for households and companies, this would imply that the central bank would enter into competition for retail deposits with the banking sector and lead to potentially substantial operational costs and risks.”
No Spectacular Reason for Digital Currencies
The President also stated the fact that there was “no concrete need” at present is enough reason why there is no need to issue additional currency within the Eurozone, which is because there is a demand for cash banknotes that has “continues to grow” in the twenty-eight member states of the European Union.
President Mario Draghi went further to deny the speculations that the twenty-eight-member bloc might have a traditional bank-issued virtual currency, which was done by countries like Russia and China.
This undoubtedly is not only sufficient to respond to Fernández’s query but also sufficient to define the position of the European Union as regards cryptocurrencies most especially the bank-issued token.