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Worries that privately issued currencies could displace government money were among the reasons the ECB launched its own digital euro project, but the bank is still years away from issuing any digital money.
This is the key worry of governments with cryptocurrencies, and was the main selling point of them initially, before the whole crypto tech bro hype.
If cryptocurrencies would gain traction as a regular payment method, it would weaken the ECB and all other central banks.
I dont see the point in cryptocurrencies currently as they all failed to deliver on that (and many more) promises, but we have seen regions where the government felt the need to ban them, to curb the actual use of the for regular payment. IIRC admids its ongoing inflation crisis Turkey banned the use of cryptocurrencies to keep people from dropping the Lira.
Another thing of course is that the banks are unhappy with not getting their share in money laundering, crime investments and tax evasion, like they do with government currencies. Cryptocurrencies could also democratize organized crime and not just leave it to the established ties between politics, banks and existing crime groups. As Lagarde is a convicted finance criminal that is also a factor to consider in her stance on cryptocurrencies.
This is the key worry of governments with cryptocurrencies, and was the main selling point of them initially, before the whole crypto tech bro hype.
Yep. Arguably Bitcoin arose from the 2008 financial crisis and the following bailouts.
What I’ve never understood about it is that it seems so unlikely that it would ever replace a national currency, for two simple reasons. First, because taxes owed in a country can only be repaid in the national currency. Second, because government contracts will only ever pay in the national currency, from macroprojects, to maintenance contracts, to millions of civil servants. This creates both a ton of demand and a ton of supply for the national currency.
And that doesn’t even take into account the role of the central bank and private banks in the money supply. Being highly regulated, there’s zero chance that a private currency would ever be legally allowed to take hold there either.
Central bank digital currencies appear to have very little to do with crypto currencies like Bitcoin. Rather, they appear to be a mechanism to surgically induce economic stimulus when and where desired, like a more controlled version of the stimulus checks that we saw in many countries during COVID.
For example, they could directly credit your digital currency account with a certain amount of money that you are only allowed to spend on certain goods and services and for a limited amount of time. This would ensure that the money is spent and stimulates certain economic aress rather than being hoarded or invested.
Another thing of course is that the banks are unhappy with not getting their share in money laundering, crime investments and tax evasion, like they do with government currencies. Cryptocurrencies could also democratize organized crime and not just leave it to the established ties between politics, banks and existing crime groups.
I’m not sure that “cryptocurrencies make it much easier for criminals to launder money, finance criminal enterprises, evade taxes and for organized crime to funnel dark money and into politics and corrupt politicians” is the kind of pro-cryptocurrency argument you seem to imply it is.
I’m not saying it is an argument pro cryptocurrency. It is a reason for banks to be against it. And it is a reason that shouldn’t exist, because banks who have organized crime as a staple and politicians who do the bidding of organized crime should be dismantled and put into prison.
That’s fair.
However, it’s just an argument for cracking down on money laundering, criminal enterprises, dark money in politics, etc.
Bad actors who oppose cryptocurrencies out of nefarious reasons don’t make cryptocurrencies a good thing, particularly if even worse actors support cryptocurrencies for even worse reasons.
This is the best summary I could come up with:
FRANKFURT, Nov 24 (Reuters) - No one is a prophet in their own land, including European Central Bank President Christine Lagarde, who admitted on Friday that her son lost “almost all” of his investments in crypto assets, despite copious warnings.
Lagarde has long railed against cryptocurrencies, calling them speculative, worthless and a tool often used by criminals for illicit activity.
“He ignored me royally, which is his privilege,” Lagarde told a town hall with students in Frankfurt.
The ECB has called for global regulation of crypto assets both to protect consumers who are unaware of the risk and to close a loophole that can be used to channel funding to terrorists or lets criminals launder cash.
Worries that privately issued currencies could displace government money were among the reasons the ECB launched its own digital euro project, but the bank is still years away from issuing any digital money.
Last month the bank started the “preparation phase” for the digital euro but said it would need another two years before it was in a position to decide whether to roll it out or not.
The original article contains 297 words, the summary contains 184 words. Saved 38%. I’m a bot and I’m open source!
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