Bitcoin was created at the height of the global economic crisis. At the time, the global economy was quite fragile and people had lost faith in the banking system. After Bitcoin was launched, many of its proponents saw it as the future of finance. They believed it would bring financial freedom. However, its critics believe that it is a scam and an illusion.
ECB’s Former Exec Thinks It is an Illusion
The ECB and many other central banks have never liked Bitcoin. They view cryptocurrencies as a threat to the health of the financial system. During a recent panel discussion that was held in Vienna, the former Director-General of the ECB, Aurel Schubert, said that Bitcoin was an illusion. In his speech, he said that one day, Bitcoin would be one of the items displayed at the Museum of illusions. He added that he believed in central banks and their fiat money. As a result, he was sure that fiat money would not be on display at the Museum of illusions any time soon.
However, he conceded that the market needed disruptive digital solutions. This is especially so in markets which are plagued by inefficiency and the use of legacy systems. He noted that it was clear the market needed a quick and safe cross-border payment solution that would be available 24/7. Besides that, the market wanted a digital solution that allowed for smooth exchanges. The former director-general said that while local payment solutions did exist, they were not global. He added that these local solutions were compartmentalized and they might be fit for the current globalized economy.
Bitcoin is Not the Solution
During the discussion, he said that Bitcoin was not a currency and it was not a solution. He noted that the focus in the Bitcoin market was on making capital gains. Consequently, this made the crypto industry look like a Ponzi scheme. Schubert was also unconvinced of the use of Bitcoin as a medium of exchange, pointing to the high transaction fees of sending Bitcoin on the blockchain.
Central Bankers do not like Crypto
The comments by the former executive are not surprising. The crypto industry has received a lot of criticism since Bitcoin was launched from central bankers. A while ago, the ECB head Jean-Claude Trichet, criticized Bitcoin during a panel discussion that was held in Beijing during the annual conference of the Caixin media group.
While the ECB is critical of crypto, the launch of cryptocurrencies has inspired the bank to consider a digital currency. The bank published a paper in which it lays out the conditions that would lead it to consider a digital currency.
The paper states that efforts by the payments industry do not lead to an efficient payment solution for the whole of Europe, they might consider issuing a digital currency. Besides that, they noted that if the social need arose for a digital solution, they could consider issuing a central bank digital currency.
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