When it comes to monetary policy in the European Union (EU), Mario Draghi is the go-to guy. He is currently the president of the European Central Bank, so his word is often final. While the EU has been discussing implementing blanket crypto laws for all EU nations, Draghi and his team at the Central Bank have been looking at the potential for creating an EU-centric crypto. Yet, it now appears as if Draghi and his team have decided that an EU cryptocurrency isn’t really needed or justified at this point in time.
Risk of Destabilizing Eurozone Banks
Draghi admitted that the Central Bank operating and maintaining every EU account would make certain things easier – such as moving between EU nations. However, he also concluded that it would also be very problematic and could cause destabilization of the banking system within Eurozone countries. By removing the need for local banks – due to the fact the Central Bank would deal with all banking needs – these institutions would end up being in direct competition with the Central Bank. As the Central Bank would essentially make freedom of movement much simpler, local banks would struggle to survive and would end up having to close their doors. This creates a rather problematic scenario for people with mortgages and savings.
Cash is Still King
According to Draghi, cash remains king in Europe, as the demand for Euro bank-notes is still soaring – but there is an explanation for this. Many nations that have recently joined Europe are still developing nations. This means technology, such as debit and credit cards, are still widely underused and a large percentage of the population simply don’t understand how they work. This has hampered adoption of electronic payment systems in stores and shops, meaning cash must be used for purchases
In Malta, where blockchain activity is rife, they face similar issues. In an exclusive interview with BitStarz News, Jonathan Galea – a leading blockchain expert – said, “Malta still has to make the transition from physical to digital. Hopefully, we’ll be able to leap-frog the transition to credit cards and proceed immediately to crypto.”
Other Nations Creating Their Own Cryptos
Around the globe, other countries don’t seem to have the same issue Draghi foresees when it comes to creating their own cryptos. Venezuela has made its Petro cryptocurrency the official currency of the nation. Even though there have been reports of virtually no use of the Petro in the country, the government insists it is popular and is being used nationwide. Elsewhere, the Marshall Islands declared cryptos legal forms of payments, but it was then urged to revoke the decision by the IMF. This highlights many nations’ desire to begin using cryptocurrencies as legal tender, as well as creating government-backed cryptos.
While Draghi does have a point about destabilizing the private banking sector, these banks could simply adopt the Central Bank’s cryptocurrency. This would effectively make them local representatives for the Central Bank. There is still a lot of FUD around regulations and government entities, due to the youthfulness of the industry. So, it will take some time before we see people like Draghi creating central cryptocurrencies, but that day will come.