Bundesbank Board Member Does Not Foresee Eurozone Cryptocurrency

December 29, 2017 6:56 PM

Cryptocurrency for the eurozone won’t be coming any time soon, according to a Bundesbank executive board member.

Those waiting for the eurozone to adopt a cryptocurrency backed by central banks may be disappointed to hear that Bundesbank executive board member Carl Ludwig Thiel will not introduce any such form of currency for adoption.

In an interview last week, Thiele also warned of losses due to volatility in cryptocurrencies: “Digital central bank money analogous to cash is currently not in sight,” he said, adding, “We are seeing a rapid increase in value, which brings the risk of rapid losses.”

Christoph Schmidt, head of Germany’s panel of economic advisers (referred to as “the wise men” by some), said that there could be economic side effects throughout the entire financial system if investors finance their speculations with debt. “If their losses affect others because they were financed with loans, then that would increase the risk of distortions on financial markets,” he told German press.

After a bearish holiday following all-time highs for many cryptocurrencies including Ether and bitcoin, many old-guard economists like Thiel and Schmidt have mentioned fears of a so-called bubble in the marketplace. While no one can say for sure if that’s true, it’s worth noting that cryptocurrencies might not follow typical market logic: first of all, they trade nonstop. Secondly, and possibly more significant, entities that play a role in the macroeconomics of the cryptocurrency marketplace may not have the same “rational expectations” typified in new Keynesian economic models.

Still, critics of cryptocurrencies, like economist and Nobel Prize recipient Joseph Stiglitz, have claimed that they “ought to be outlawed,” and don’t “serve any social function.” Conversely, recipients of charitable donations in cryptocurrency, individuals who use voting systems built on the Ethereum platform, and those who stand to benefit from efficient energy grids powered by blockchain technology may disagree.

Schmidt has yet to go so far as to call for an outright ban on cryptocurrencies in the eurozone, but he pointed out that investors should have detailed information on the risks in the marketplace in order to educate themselves.

Acquiring knowledge is also a focus of Felix Hufeld, the president of the German Federal Financial Supervisory Authority (BaFin). He stated that while regulators need to “stay on the ball,” there is still a great deal they have yet to learn. “We are all working on understanding the topic and building our know-how.”

Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine. He is a full time staff writer for ETHNews and holds value in Ether.

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