European Central Bank: Crypto Does Not Have Tangible Impact on Real Economy
Ana Alexandre's original article for cointelegraph.com reduced by 50%
The European Central Bank stated that cryptocurrencies do not have implications on monetary policy or factor into the real economy in a May report. In the report dubbed "Crypto-Assets: Implications for financial stability, monetary policy, and payments and market infrastructures," ECB looks into the potential impact of digital currencies on economic developments and monetary policy. The bank specifically states that such implications could occur should cryptocurrencies became a credible substitute for cash and deposits, while currently they do not fulfil the functions of money.
The bank further says that cryptocurrencies' deployment remains limited, with a small number of merchants ready to allow purchases of goods and services with digital currency, as the prices of digital assets remain volatile. The ECB notes that the development of stablecoins - the value of which is pegged to physical assets, fiat currencies, or is stabilized by an algorithm - warrants continuous monitoring because they could become less volatile if collateralized by central bank reserves. Finally, the bank argues that "The absence of any specific institution protecting the value of crypto-assets hinders their use as a form of money, since their volatility: a) prevents their use as a store of value; b) discourages their use as a means of payment; and c) makes it difficult to use them as a unit of account." Echoing the ECB's stance on stablecoins, the Bank of France's governor Francois Villeroy de Galhau said that the bank is closely watching stablecoins' development.
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