ECB and BIS: Bitcoin Can not Be Considered as Currency

Bitcoin and other cryptocurrencies can not provide answers to any societies that use large amounts of money in daily transactions, said two prominent European policymakers.

The statement is part of an opinion published on Tuesday by a member of the European Central Bank executive board (ECB), Benoit Couere, and Jacqueline Loh, chairman of the International Banking Settlement Committee (BIS) in Switzerland.

The report claims that benchmark-based blocks of blockchain are rarely used for the price of goods and that they are relatively inexpensive in transactions. He adds that as a store of value, they are similar to "gambling in the casino."

The opinion section acknowledges that with the increase in non-cash payments, electronic solutions of some form may come.

"While bitcoins and other cryptocurrencies are mirages, they may be a sign of early change, as the Palm Pilot paved the way for today's smartphones," the report said.

"Cash will not be king forever, though it still controls many parts of the world."

New research from BIS shows non-cash payments in 25 major countries about twice that of gross domestic product, since the turn of the century.

Currently, cash is the only way that a person on the road can access the money backed by the central bank. If cash is lost from the road then the economy will depend entirely on the liquidity of commercial banks.

In addition, the report also shows that Central Bank Digital Currency (CBDC) can overcome these risks, but it can also disrupt the way the current financial and economic system works.

"The whole of the CBDC will challenge the current bank model that takes deposits of customers and uses the money to fund loans that help drive the economy," he said.

"The consequences for the bank's business model and financial stability need to be carefully described."

The report also notes that such a currency will not be able to provide the same anonymity as cash, as it will lead to illegal use. It could create a different problem in which the central bank will hold an unprecedented amount of information about the individual.

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