President of the European Central Bank makes flexible position on cryptocurrencies.

The president of the European Central Bank (ECB), Mario Draghi, expressed a criterion of greater openness than the one shown so far by the authorities in Europe, on cryptocurrencies. This follows from the views expressed by the senior official in a letter sent to MEP Eva Kaili.

Draghi said in the letter, dated September 26, 2019, that the European System of Central Banks (ESCB) is evaluating cryptocurrencies and stablecoins (tokens anchored to the price of another asset). This as part of an effort to establish the implications of these financial technologies in monetary policy, as well as in the security and efficiency of payments. However, he recognized the future potential of cryptocurrencies as a means of payment.

“Until now, stable currencies and cryptocurrencies have had limited implications in these areas and are not designed to make them suitable substitutes for money. However, given the rapid pace of technological development and the evolution of the business model, this evaluation may be subject to changes in the future.”

In mid-September there was a meeting of central banks globally, attended by representatives of Libra, the Facebook stablecoin project. The emissaries of this one and other projects that include collapsed tokens of global circulation, were summoned to answer the doubts of the officials of 28 central banks present in the meeting.

The information disclosed at that time revealed the concern of financial regulators about the possible risks of stablecoins such as Libra, for financial stability.

Benoît Cœuré, chairman of the Committee for Payment and Market Infrastructure (CPMI) and convener of the meeting, had stated in a previous forum that the Libra cryptocurrency represented a “wake-up call” for the ECB. Even at a previous meeting of finance ministers globally, the representative of France, Bruno Le Maire, stressed that Libra cannot be allowed to operate in Europe.

Draghi mentioned in his letter to the Libra project, but with a different tone. He said Libra could have a global adoption potential for retail and wholesale payments. In addition, he stressed that the project is receiving the support of large technology companies.

On the other hand, he mentioned that the ESCB cooperates with its peers in the G7 stablecoins working group, where it has been recognized the need to optimize the current system of cross-border payments, as well as access to payment services. In this regard, he reiterated that the association continues to reflect on the pros and cons of issuing a “digital form of the euro”, that is, a stablecoin backed by the European Union currency, which is available to the general public.

“From the perspective of the Central Bank, the key issue for a digital currency of the central bank is not technology, but its usefulness in terms of costs and benefits to the public,” Draghi said. He also mentioned that regulatory, systemic and political issues should be addressed, before advancing in any potentially global initiative, such as stablecoins.


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