Cryptocurrency still unable to have impact on economy; ECB report

A recent European Central Bank (ECB) report suggests that cryptocurrency does not have any real impact on the world economy, and they do not have any noteworthy effect on monetary policy.

ECB published the report in May titled “Crypto-Assets: Implications for financial stability, monetary policy, and payments and market infrastructure”.

A study for that report was conducted to investigate the possible impacts of digital currency on monetary policy and economic developments.

According to the report, so far, cryptocurrencies are not able to achieve the purpose of money. The report also noted that cryptocurrency could have an impact on economic developments only if cryptocurrencies were given the status of reliable replacement of cash and transactions.

In the report, it was also mentioned that the prices of virtual assets are of unstable nature. Therefore, a small number of European merchants are ready to use cryptocurrency as a payment method, so, this tends to limit the use of cryptocurrency.

However, the report suggested that circumstances can be different from stablecoin’s development. As stablecoin’s value is pegged to physical assets, and there is a possibility of their prices becoming less unstable.

Furthermore, the bank stated that the lack of the central bank’s support tends to be causing impediment for cryptocurrency to be used as a replacement for cash and deposits.

According to the claims made by the President of the European Bank: Mario Draghi, cryptocurrencies are not likely to have any huge impact on the economies of the world.

He further stated that as digital coins are not considered currency rather just an asset. ECB will always be backing the Euro, whereas; cryptocurrency is not backed by any institution making them extremely risky assets.