Bitcoin 'Evil Spawn Of Financial Crisis', European Central Bank Board Member Says

The European Central Bank's (ECB) executive board member Benoît Cœuré, speaking about cryptocurrencies at the Economics of Payments IX conference in Basel, Switzerland, mentioned bitcoin specifically and called it "the evil spawn of the financial crisis." In the speech, published Thursday on the ECB website, Cœuré echoed the opinion of several regulatory bodies and banks that carry out research and surveys related to cryptocurrencies and its underlying technology, blockchain.

"Lightning may strike me for saying this in the Tower of Basel – but bitcoin was an extremely clever idea. Sadly, not every clever idea is a good idea. The opportunities of the blockchain are many, but the problems of bitcoin are also plentiful. I believe that Agustín Carstens [Mexican economist] summed its manifold problems up well when he said that bitcoin is a combination of a bubble, a Ponzi scheme, and an environmental disaster," Cœuré said.

Cœuré, who is also the author of several books on international and European monetary and financial issues, said the Committee on Payments and Market Infrastructures (CPMI, made up of the central banks of G10 countries) started studying cryptocurrencies and its underlying technology — distributed ledger technology and blockchain — before 2015. Cœuré also said Europe's central bank had released various reports on cryptocurrencies, however, there was still much they "do not understand" even as things were moving rapidly.

Speaking about the creation of cryptocurrencies by the government of various countries themselves, Cœuré said it was a pressing issue in countries where demand for cash had been declining sharply. He said that in other jurisdictions, there was more time to study the technology and to evaluate the implications for both monetary policy and financial stability of central banks issuing their own digital currencies.

In the speech, the ECB board member mentioned a survey conducted by CPMI that revealed about 80 central banks were working in cryptocurrency field.

"A clear majority, 69%, is currently, or will soon be, conducting work related to CBDCs [central bank digital currencies]. The remaining central banks are typically either small in size, face more pressing challenges, or indicated that they rely on work by regional research programs or international organizations, such as the IMF," read the published speech.

Cœuré also highlighted the recent successful integration of cryptocurrency for cross-border remittances-related payment services and said that these actions confirm the "potential for new technologies" to support financial inclusion.

While outlining the central bank's stance on cryptocurrency adoption, Cœuré said most central banks were still at an early stage — studying digital currencies — and a CBDC, in whatever form, was unlikely to be declared within the next decade, "even among those four central banks [United States Federal Reserve, European Central Bank, Bank of England, Bank of Japan] that have indicated that they have reached the stage of developing a pilot project."

Member of the European Parliament, Jonás Fernández in September had said: “The ECB and the Eurosystem currently have no plans to issue a central bank digital currency. Nonetheless, we are carefully analyzing the potential consequences of issuing such a currency as a complement to cash.”