Bitcoin and other crypto-assets have long attracted criticism from regulators and traditional economists, with most of them warning about their swinging prices. The stellar performance of bitcoin this year has changed many of the critics’ minds, although some continue saying that bitcoin is just a passing fad.
Former president of the European Central Bank (ECB), Jean-Claude Trichet has publicly discredited bitcoin, arguing that it does not possess the qualities of a real currency.
Former ECB Exec Is ‘Strongly Against Bitcoin’
The European Union (EU) is a supranational body that currently consists of 28 member countries. All of these countries have the Euro as their national currency and European Central Bank (ECB) as their common central bank. The bank’s former head Jean-Claude Trichet recently slammed bitcoin during Caixin’s 10th annual conference held in Beijing, China.
While stating that they have been “complacent” with the asset class, Trichet explained that he does not support bitcoin because “it is not real” as it lacks the “characteristics that a currency must have” – and as so, it does not qualify as a potential alternative to fiat money.
He goes to point out that the bitcoin market is laden with so much speculation which he believes is unhealthy:
“Even if [the cryptocurrency] is supposed to be based on underlying assets, I am observing a lot of speculation. It is not healthy,” he explained.
The ex- ECB boss also mentioned that he does not support Facebook’s cryptocurrency project, Libra.
Digital ‘Eurocoin’ Imminent?
With Trichet being a former banker, his comments about bitcoin and Libra do not come as much of a surprise. It’s a no-brainer: many central banks are against cryptocurrencies because they cripple their efforts of controlling markets while sometimes also making what they do meaningless. In fact, most governments and central banks see bitcoin and other digital currencies like Libra as a potential threat to their monetary sovereignty.
However, many central banks around the globe are now jumping on the bitcoin bandwagon and looking into developing their own central bank-backed digital currencies – a digital Euro coin could be next.
According to a draft document first seen by Reuters, the EU has encouraged the European Union to explore the feasibility of issuing its own digital currency as well as develop a solid approach to all cryptocurrencies. The draft further suggests imposing a ban on assets that are considered too risky. If this draft is adopted, we could see an EU-wide response to the regulation of cryptocurrencies and possibly a digital Euro.
However, as we all know, China is the global frontrunner for its efforts to create a national digital currency. While most countries have been merely researching or dismissing digital assets, the People’s Bank of China is presently in final development stages of the country’s digital currency known as Digital Currency Electronic Payment (DCEP) and China could soon be the first major nation to launch a central bank digital currency.