ECB

European Inflation Skyrockets to Record 7.5% — ECB Chief Lagarde Expects Energy Prices to ‘Stay Higher for Longer’

April 3, 2022 Bitcoin.com

ECB official suggests importance of physical stores accepting digital euro

March 30, 2022 Coin Telegraph

Findings from the ECB's focus groups said the public was more likely to accept a digital euro that is accepted in physical and online stores and allows easy person-to-person payments.

Fabio Panetta, an executive board member of the European Central Bank, said focus groups exploring the potential rollout of a digital euro hinted the ability to use the digital currency at online and physical stores could be a key feature.

In a written statement released Wednesday, Panetta broke down the findings of ECB focus groups on digital payment methods commissioned in September 2021, which suggested people were more likely to accept a digital euro accepted in physical and online stores and allowed easy person-to-person payments. According to Panetta, all merchants would need to accept a digital euro to see adoption trends like those the fiat euro experienced 20 years ago.

“The introduction of euro banknotes made it possible for us to pay with physical euros anywhere in the euro area,” said Panetta. “So it is no surprise that people expect to be able to use the digital complement to banknotes wherever they can pay digitally or online.”

Findings from the focus groups also hinted that many members of the general public and merchants were unfamiliar with a digital euro and feared that cash was being phased out as the number of use cases for the technology increased. However, once the concept was explained to them, members of the focus group from the general public said being “widely accepted in all kinds of physical shops and online” was the most desirable feature for a digital euro, while merchants suggested high demand would be their biggest driver.

A digital euro can only be successful if it meets the payment needs of Europeans, says Executive Board member Fabio Panetta. Focus groups have provided us with key input for the project.

Mr Panetta’s speech https://t.co/XVYfXtmgpN
Read the report https://t.co/enbOpUWFfl

1/5 pic.twitter.com/euAyFoO24J
— European Central Bank (@ecb) March 30, 2022

Panetta added that the ECB would consider these features alongside concerns over privacy in response to the public consultations the central bank conducted between October 2020 and January 2021. He said the ECB would conduct another round of focus groups on the digital euro toward the end of 2022, providing data that could be used to determine relevant policies:

“We are getting a clearer picture of what citizens and merchants want, so we can finetune all the design features of a digital euro before any potential issuance. And co-legislators have a key role to play, for instance to enable greater privacy.”

The European Central Bank has been exploring the development of a digital euro as interest in central bank digital currencies seems to be growing across the world. The Central Bank of the Bahamas was the first nation to release a CBDC in October 2020. China began trials of its digital yuan in 2020, later making it available to international athletes at the Beijing Winter Olympics in February.

ECB Chief: Cryptocurrencies Are ‘Certainly’ Being Used to Circumvent Russian Sanctions

March 23, 2022 Bitcoin.com

Christine Lagarde Claims Crypto Is Being Used to Evade Russian Sanctions

March 22, 2022 The Crypto Briefing

U.S. Inflation Is at Record Highs, But Crypto Doesn’t Care

March 10, 2022 The Crypto Briefing

Poll Suggests ECB May Wait Until Q4 to Raise Rates, Several Banks Expect a Series of Fed Rate Hikes This Year

March 7, 2022 Bitcoin.com

Crypto’s Sanction-Slipping Power: Why Bitcoin’s Neutrality Is Its Greatest Humanitarian Asset

March 4, 2022 Bitcoin.com

Bitcoin a ‘good bet’ if Fed continues easing to avoid a recession — analyst

March 3, 2022 Coin Telegraph

Bitcoin

The statement appears as Jerome Powell keeps the door open for a 0.5% rate hike in the summer and Fitch Ratings warn about a major slash in the U.S. gross domestic product (GDP).

Bitcoin (BTC) has the potential to become a "good bet" for investors if the Federal Reserve does everything it can to keep the U.S. economy afloat against impending recession risks, according to popular analyst Bitcoin Jack.

The independent market analyst pitted the flagship cryptocurrency, often called "digital gold" by its enthusiasts, against the prospects of further quantitative easing by the U.S. central bank, noting that the ongoing military standoff between Ukraine and Russia had choked the supply chain of essential commodities, such as oil and wheat, resulting in higher global inflation.

For instance, consumer prices in Europe jumped 5.8% year-over-year in February compared to 5.1% in the previous month, greater than the median economist forecast of 5.6% in a recent Bloomberg survey.

Interestingly, the energy sector was responsible for whipsawing anticipations by recording a 31% rise in prices, way higher than food and services.

Similarly, the U.S. consumer price index (CPI) advanced 7.5% year-on-year in January 2022, its highest level in nearly four decades.

Jack hinted that the ongoing inflationary risks of the Russia-Ukraine crisis could leave the Fed with two options.

First, they could hike interest rates aggressively to bring inflation down, thus raising recession risks. Or, they could continue their quantitative easing program only to burden the economy with higher consumer prices and a lower U.S. dollar purchasing power.

"If easing continues, inflation keeps going higher, they [Bitcoin and gold] seem good bets as long as a recession/crash remains avoided," Jack tweeted March 2, adding:

"But if everything crashes, (almost) everything crashes and you buy the phoenixes that rise out of the ashes."

Powell indicates aggressive rate hikes

Jack's analogy appeared hours before Jerome Powell, the chairman of the Federal Reserve, confirmed that he would propose a 25 basis point increase in the interest rates in the next Federal Open Market Committee (FOMC) meeting mid-March.

Powell noted that the Fed had been assessing the prospect of raising rates consecutively for the rest of 2022. But the recent invasion of Ukraine by Russia has prompted them to "proceed carefully along the lines."

"We're going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment," he told the House Financial Services Committee during his testimony on Wednesday.

However, Powell did not rule out the possibility of raising interest rates by a half-point percentage if the next CPI readings come any higher than anticipated. Excerpts:

"To the extent inflation comes in higher or is more persistently high than that, then we would be prepared to move more aggressively."

Bitcoin's safe-haven narrative sustains

Bitcoin continued its decline after Powell's remarks, briefly dropping by over 2% to below $43,000 on Thursday.

The move downside appeared in contrast to a jump in the U.S. dollar index (DXY), which rose 0.25% in the same period, suggesting that global investors had been rushing to the greenback's safety against the ongoing economic and geopolitical uncertainty.

*BTC/USD versus DXY daily price chart. Source: TradingView*

Appetite for safe-havens also boosted Bitcoin's demand earlier this week. On Feb. 28, BTC's price rallied by a little over 14.50% in a day, registering its biggest one-day increase in a year.

An Arcane Research report asserted that Ukrainians seeking "powerful fundraising tools" and Russians trying to circumvent "the strictest capital controls in decades" were behind the BTC price jump.

"This speculation may have contributed to the 15% increase in the bitcoin price over the past seven days," Arcane Research wrote on March 1, adding that BTC/USD could climb to $47,000 next.

Similarly, Bitcoin-based investment vehicles attracted $195 million worth of capital inflow month-to-date until Feb. 25, the latest CoinShares report revealed.

Another massive #Bitcoin inflow to the Canadian Bitcoin Purpose spot ETF on Tuesday with 1.15k $BTC added to the fund! AUM is now sitting at a new all-time high of 33.5k bitcoin! pic.twitter.com/PuP4vQw0hD
— Jan Wüstenfeld (@JanWues) March 2, 2022

But risks of recession kept clouding over Bitcoin's upside potential. For instance, Brian Coulton, chief economist at credit rating agency Fitch Ratings, anticipated core inflation to remain high throughout 2022, especially as the Ukraine-Russia crisis exacerbated the risks of global price shocks.

"If core inflation remains high and inflation expectations rise the Fed, and the BOE could be left with no choice but to quickly move rates to neutral or restrictive levels," he wrote, adding that it could push the Fed fund rate to 3% by the end of 2022. Excerpts:

"US GDP growth could fall to 0.5% or below in 2023 in such a scenario, compared with Fitch's baseline forecast of 1.9%."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

European Central Bank President Urges Speedy Approval of New Broad Crypto Regulation

March 1, 2022 The Daily Hodl

ECB president calls for crypto regulation in response to Russia potentially evading sanctions

February 25, 2022 Coin Telegraph

Christine Lagarde

"It’s so critically important that MiCA is pushed through as quickly as possible so we have a regulatory framework within which crypto assets can actually be caught," said Christine Lagarde.

Christine Lagarde, president of the European Central Bank (ECB), has called on lawmakers to approve a regulatory framework on crypto, hinting at potentially preventing Russia from getting around economic sanctions.

Speaking to reporters at an informal meeting of economics and finance ministers on Friday, Lagarde said the European Central Bank would be “decisively and rigorously” implementing sanctions on Russia imposed by European lawmakers in response to the country’s invasion of Ukraine. In response to a question on Russia potentially using crypto to evade some of these measures, the ECB president urged action on an existing proposal for a regulatory framework on digital assets.

“Whenever there is a ban or prohibition or a mechanism in place to boycott or prohibit, there are always criminal ways that will try to circumvent the prohibition or the ban,” said Lagarde. “It’s so critically important that MiCA is pushed through as quickly as possible so we have a regulatory framework within which crypto assets can actually be caught.”

*European Central Bank President Christine Lagarde. Source: YouTube*

The MiCA, or Markets in Crypto Assets, proposed creating “a regulatory framework for the crypto-assets market that supports innovation and draws on the potential of crypto-assets in a way that preserves financial stability and protects investors.” First introduced to the European Commission in September 2020 and adopted by the European Council in November 2021, the proposal was scheduled for a vote to be implemented by the European Parliament on Feb. 28.

However, rapporteur Stefan Berge announced on Friday he had postponed the vote amid concerns it would be misinterpreted as a ban on proof-of-work crypto mining. At the time of publication, there is no scheduled date for EU officials to vote on the framework.

On Thursday, United States President Joe Biden announced a series of sanctions aimed at imposing “devastating costs” on Russia due to the country’s attack on Ukraine. The president announced that the U.S. and its allies would impose sanctions on five major Russia-based banks as well as several elite nationals who have “enriched themselves at the expense of the Russian state.” The economic measures did not include cutting Russia off from the SWIFT payment system or crypto transfers.

The situation in Ukraine is still developing, but there have been reports of Russia bombing locations across the country including a military airport near the capital city of Kyiv since Russian President Vladimir Putin announced a “special military operation” on Thursday. Members of the crypto community have offered donations to the Ukrainian military and local organizations as the crisis unfolds.

Powell indicates aggressive rate hikes

Bitcoin's safe-haven narrative sustains

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