Neither Bitcoin, nor any other cryptocurrency can be regarded as viable answer to the challenges posed by a society where cash is less and less involved in everyday transactions, as stated by Benoit Couere, a member of the executive board of the European Central Bank, and Jacqueline Loh, chair of the Switzerland’s Bank for International Settlements (BIS) Markets Committee, in their recent joint article.
This opinion piece by two leading European policymakers was published today. It is also stated in it that blockchain-based tokens do not seem to be a worthy means of payment, as they are rarely used in pricing of goods. The co-authors compared storing value in cryptocurrencies to “gambling in a casino” as well.
Despite all that, the report pays tribute to bitcoin saying that it might be marking the emergence of a whole new economic era.
“While bitcoin and its cousins are something of a mirage, they might be an early sign of change, just as Palm Pilots paved the way for today’s smartphones. Cash will not be king forever, even though it still rules in many parts of the world,” – the co-authors state in their research, while noting that the share of non-cash payments in gross domestic product of 25 major countries has nearly doubled in last twenty years.
The researchers see central bank digital currency (CBDC) as a safer alternative to cryptocurrencies, though admitting that the global economy will wholly depend on commercial banks’ liquidity, should cash disappear altogether.
“A CBDC for all would challenge the current model of banks taking customer deposits and using that money to fund the lending that helps drive the economy. The consequences for bank business models and financial stability would need to be carefully parsed,” – the co-authors to the research conclude.