EU search: Cryptocurrencies are not a major threat to sovereign currencies | [blokt]

The Committee on Economic and Monetary Affairs of the European Parliament received a monetary dialogue entitled " Virtual currencies and monetary policy of central banks: the challenges ahead " recently. The EU report was convinced that cryptocurrencies would not "undermine the dominance of sovereign currencies and central banks".

Marek Dabrowski and Laksz Janikowski of the Center for Social and Economic Research, which is not a for-profit research institute, conducted the research. The paper opted for an objective point of view by examining the positive technological properties and the negative defects of emerging technology.

The report of the EU noted that global transaction networks of cryptocurrency safe, transparent and fast . "Emerging technology, however, remains a big challenge for central banks because of their anonymity and cross-border character . "

Although it is obvious that the Monetary Dialogue considered crypto-currencies as a lower form of private money, but was exploring situations where it would be used as a substitute for the sovereign currency." are often in countries undergoing extreme hyperinflation, political turmoil, war or financial crisis

The summary of the document, however, acknowledged that cryptocurrencies "respond to actual market demand " will remain a permanent part of the global financial and monetary architecture for the coming years ."

Existing problems with cryptocurrencies

Although there are varying definitions regarding Crypto-currencies, The European Banking Authority (EBA) defines a cryptocurrency as:

"Digital representation of a value that is neither issued by a central bank the public authority or not necessarily attached to a fiduciary currency (conventional), but accepted by a natural or legal person as a means of exchange and can be transferred, stored or exchanged electronically. "

The paper noted that cryptocurrencies do not have any intrinsic value and their value comes from the ability to transfer chips quickly without the need for an intermediary." There is currently no way around to force the parties to accept cryptocurrency as a means of exchange, since it is a system based entirely on trust.

In addition, the question of whether a cryptocurrency should The Bank of Canada, the Bank of England and others have argued that cryptocurrencies do not meet the traditional definition of money with respect to financial and economic systems.

Cryptocurrencies are a limited means of payment, store of value and unit of account.There are not many traders open to the acceptance of crypto-currencies, they are extremely volatile and the number of transactions processed globally is significantly lower than the global money supply.

Despite these criticisms, the EU report commented that cryptocurrencies might someday " serve as private money in their own right regardless of their future share in the overall volume transactions and financial badets . "

Cryptocurrencies: a substitute currency in failing economies [19659007The EU Report also mentions that in economies experiencing political instability, significant macroeconomic problems and high uncertainty, many incentives to adopt cryptocurrencies are in place in place of the existing sovereign currency

. very popular in Iran, a country where its currency has lost a third of its value since December 2017. According to Brookings the withdrawal of the United States from the 2015 Iranian nuclear agreement and the reinstatement of sanctions Americans have dropped the value of the Rial fairly quickly.

While Iran's central bank banned cryptocurrency transactions outside the country, more than $ 2.5 billion has already left Iran in the form of cryptocurrencies.

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