Cryptocurrencies, EU central banks "safe". An interesting dossier edited by ECON of the European Parliament.
La Commission for Economic and Monetary Affairs (ECON) of the European Parliament published a report by 30 pages on cryptocurrency, entitled "Virtual currencies and central bank monetary policy: future challenges". In conclusion, the dossier believes it is unlikely that cryptocurrency will take the place of fiat money, even in the long term.
Written by Marek Dabrowski e Lukasz Janikowski, belonging to the Center for social and economic research, a non-profit research institute in Warsaw, the report begins by stating that contrary to the expectations of many, the experiment of Bitcoin not only has it survived, but it has expanded beyond niche status thanks above all to the bubble of 2017, the main element responsible for the wave of global attraction.
After examining the technology behind the three most important cryptocurrencies - Bitcoin Ethereum e Ripple - the authors conclude that virtual currencies have no intrinsic value "in the sense that they are not linked to any raw material or sovereign currency", but recognize that legal currencies also share this characteristic.
The two remember then that the classic definition of currency provides that the asset is a means of payment, an account unit and a value deposit. Some argue that cryptocurrencies do not meet or only partially meet these criteria. However, the report recognizes their potential and states that this possibility cannot be excluded. As evidence of this, he notes that some large companies accept cryptocurrency as a payment (although one of the mentioned companies, Expedia, has discontinued this option).
The advantages of cryptocurrencies, the dossier continues, include financial inclusion and the exclusion of the possibility of identity theft. However, the technical know-how required to use cryptocurrency is in itself a considerable barrier, and anonymity precludes theft protection. The article then points out that the advantages of the cryptocurrency payments - speed, costs and availability 24 hours on 24 - are elements that in reality even traditional payment systems could offer, given the now consolidated technological advances.
Can virtual currency break the monopoly of central banks?
The report then claims that the criptovaluta it's basically a money "private", And that experiments of the past with private money - such as during the era of free banking in the United States in the 19 century - failed for a number of reasons which could now be re-proposed. Then echoes the arguments recently put forward by the economist Robert J. Shiller, winner of the Nobel Prize of Yale University, recalling that these currencies lacked the externality of the network, that is the recognition by external economic agents. This is a necessary element to create a solid financial market: private currencies have always struggled to do so. Furthermore, the article highlights how private currencies are volatile and expensive to use.
Finally, the analysis states how some cryptocurrencies, like Bitcoin, may be able to overcome some of these disadvantages, but the exclusively digital form, the rather complicated and laborious mechanism of their creation, and the lack of political will to accept them as official money in any jurisdiction - at least in the near future - will limit the their circulation and use and make them unlikely competitors to sovereign money.
We also remind you that the regulation of cryptocurrencies varies widely between EU countries. The central government is working on appropriate laws to govern cryptocurrency throughout the continent and this report is part of the ongoing process. Last week the fifth anti-money laundering directive was published, providing local financial controllers with additional powers to access customer information, including cryptocurrency companies.
