Report: Digital currency of the Central Bank could provide stability, but the crypto is too volatile

Economic researchers of Kiel Institute for the World Economy have identified the digital currencies issued by a central bank as an opportunity for a more stable financial system, while at the same time rejecting cryptocurrencies , according informed Today, June 27, Cointelegraph auf Deutsch. The Kiel researchers distinguish digital or virtual currencies from cryptocurrencies as Bitcoin in your report published on June 26, which will serve as a guide for the " Monetary dialogue "in the ECON Commission of the European Parliament According to the report, cryptocurrencies are not a viable alternative to the traditional currencies of central banks:

"Currently, cryptocurrencies such as Bitcoin can not replace traditional currencies to a significant degree, and available technology faces serious limitations with respect to scalability, in particular it would be prohibitively expensive to carry out even a moderate part of the costs. transactions that are now handled through traditional currencies through cryptocurrencies ".

The Kiel Institute report states that, instead of being a means of exchange, cryptocurrencies and related assets have been used mainly as a vehicle for financial speculation. Since they were not based on a fixed value, they could not be evaluated rationally. This would cause sharp price fluctuations, which in turn would attract more speculators. In addition, the lack of regulation increases this effect due to lack of transparency. The analysis continued by stating that digital currencies could represent an opportunity for central banks, even if they are "disturbing" due to the loss of importance of traditional bank accounts:

"To avoid a recurring instability of the banking system, commercial banks would have to find more reliable sources of financing than deposits." As the fractional reserve character of the current banking system can be a major source of instability, such a disturbing change is not necessarily poor development, but it could finally pave the way for a more stable financial system. "

Some global banks are already considering the possibility of introducing their own digital currencies, such as the Bank of Thailand and the Central Bank of the Bahamas . Even the governor of the Bank of England, considered a heavyweight in the international monetary system, He said that was open to the idea of ​​a central bank digital currency.