ECB ‘No Plans’ to Issue Cryptocurrencies, Cites Growing Cash Demand in the EU Zone

The European Central Bank President Mario Draghi said that the institution has no plans yet to issue a digital currency of its own.  In a letter addressing the query by MEP Jonás Fernández on September 12, Draghi wrote that there is still a need for “substantial development”  on the new technology underlying these cryptocurrencies until the ECB would look into using them.

“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.”

To explain why the ECB has no plans to launch the new currencies, Fernández added:

“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.”

He also said that there is currently “no concrete need” to issue more currencies in the eurozone as the cash banknotes’ demand “continues to grow” within the EU28. Unlike the moves which were taken by China and Russia, Draghi said that the 28-member EU bloc is still wary about their stance on bank-issued cryptocurrencies.

In a joint report released by the ECB and Bank for International Settlements (BIS) early this year, it discussed the “side effects” of launching these digital currencies and suggested more research needed beforehand.

 

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