Central Bank Cryptocurrency More Stable. Researchers at the Kiel Institute for the World Economy have identified the digital currency issued by the central bank as an opportunity for a more stable financial system, while at the same time, they reject cryptocurrency.
Kiel researchers published a report on Tuesday (26/6), which will serve as a guide to the "Monetary Dialogue" on the ECON Committee of the European Parliament. According to the report, cryptocurrency is not an alternative to the traditional currency issued by the central bank.
"Currently, cryptocurrencies such as Bitcoin can not replace traditional currency to a significant degree. Available technologies face scalability-related limitations. In particular, the cost would be very expensive to do a moderate part of the transactions that are now handled through the traditional currency, "Kiel researchers wrote in the report.
The Kiel Institute report confirms that instead of being a medium of exchange cryptocurrency and related assets has been used as a means of financial speculation. Since they are not based on a fixed value, they can not be rationally assessed. This will lead to strong price fluctuations, which in turn will attract more speculators. Lack of regulation also increases the effect of non-transparency.
In addition, the report also states that digital currencies can be an opportunity for central banks, even if they "interfere" because they do not use traditional bank accounts.
"To avoid instability from the banking system, commercial banks will come with more reliable funding sources than deposits. Because the fractional reserve characteristics of the current banking system can be a major source of instability, these disturbing changes are not necessarily bad developments, but ultimately can pave the way for a more stable financial system, "wrote Kiel analysts in the report.
Some global banks have considered introducing their own digital currencies, such as the Bank of Thailand and the Central Bank of the Bahamas. Even the governor of the Bank of England, considered a heavyweight in the international monetary system, said he was open to the idea of the central bank's digital currency. @ BPI
