Instant Bank Payments Will End Bitcoin Binge: German Central Bank Chief

Jens Wiedmann, the president of Germany’s Bundesbank has warned that digital currencies could potentially worsen financial crises in the future. He also stated, in his personal opinion, that ‘instant payments’ would put an end to the public interest in digital currencies like bitcoin.

Jens Wiedmann, the president of Germany’s Bundesbank has warned that digital currencies could potentially worsen financial crises in the future. He also stated, in his personal opinion, that ‘instant payments’ would put an end to the public interest in digital currencies like bitcoin.

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Germany’s top central banker was speaking in Frankfurt today in a speech predominantly on the European Central Bank’s quantitative easing (QE) program when he touched on the subject of digital currencies.

Instant Payments to Dampen Bitcoin?

Wiedmann, who is one of the most powerful figures in European and the global economy, also claimed that the ongoing digitization of finance is and will remain the most significant challenge faced by central banks.

He offered a solution toward taking on popular growing financial technologies like bitcoin and other digital currencies.

In quotes reported by the Financial Times, he stated:
My personal take on this is that central banks should strive to make existing payment systems more efficient and still faster than they already are – instant payment is the buzzword here. I’m pretty confident that this will reduce most citizens’ interest in digital currencies.

‘Digital Currencies Could Worsen Financial Crises’
Wiedmann admitted that central banks are likely to create their own official digital currencies in the future. A move toward digitization which would, according to the central banker, provide citizens with the reassurance that their money would be safe. In doing so, however, Wiedmann claimed that private banks would risk bank runs during times of future crises.

A bank run occurs when a large number of customers panic to make withdrawals from financial institutions at the same time. In their attempt to safeguard their cash while losing faith in the institution, the withdrawal en masse from customers could lead to banks losing liquidity and struggle to make their loans, leaving them insolvent.

According to Wiedmann, the likelihood of a bank run is even more pronounced when a bank’s customers make digital withdrawals