Officials of the European Central Bank (ECB) are not convinced that Bitcoin (BTC) is a valuable financial asset despite the US approval of a spot exchange-traded fund (ETF) for the flagship cryptocurrency. The ECB is the central bank of European Union (EU) countries that use the euro as their currency. In a new blog post, […]
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The European Central Bank (ECB) says that Bitcoin (BTC) and other digital assets have been playing the role of a store of value for many people around the world. In a new report on the global and local drivers of Bitcoin and crypto, the ECB names three things that are driving the adoption of digital […]
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Bitcoin does the complete opposite of what the EU's central bank warned about in late 2022.
Bitcoin (BTC) has gained almost 170% since the European Central Bank (ECB) warned of its impending “irrelevance.”
As noted by crypto proponent Eric Wall and others on Dec.
Bitcoin traded at just $16,400 when on Nov. 30, 2022, the ECB published a blog post dedicated to its death.
Coming just after the implosion of exchange FTX and subsequent market flight, the post argued that even those levels were a stopping point on the way to new lows.
“The value of bitcoin peaked at USD 69,000 in November 2021 before falling to USD 17,000 by mid-June 2022.
“For bitcoin proponents, the seeming stabilization signals a breather on the way to new heights.
This “last gasp” initially continued to play out.
A year after the ECB’s premature obituary, Bitcoin is at its highest since April 2022 — at $43,800 at the time of writing, or 166% higher than when the bank sounded the alarm, per data from Cointelegraph Markets Pro and TradingView.
European Central Bank chief Christine Lagarde reportedly said her son ignored warnings against crypto investments and lost “about 60%” of his money.
European Central Bank (ECB) president and prominent Bitcoin (BTC) critic Christine Lagarde has shared a family story about unsuccessful cryptocurrency investments, according to a report from Reuters.
Lagarde told students at a town hall in Frankfurt on Nov. 24 that her son lost “almost all” of his investments in crypto assets, despite persistent warnings, Reuters reported.
“He ignored me royally, which is his privilege,” Lagarde reportedly declared, adding that he lost “almost all the money he had invested.”
The ECB chief didn’t disclose the sum her son lost, noting that he claimed it wasn't “a lot,” but only “about 60%” of his crypto investments. “So when I then had another talk with him about it, he reluctantly accepted that I was right,” Lagarde reportedly stated, adding:
“I have, as you can tell, a very low opinion of cryptos [...] People are free to invest their money where they want, people are free to speculate as much as they want, (but) people should not be free to participate in criminally sanctioned trade and businesses."
Lagarde is known in the cryptocurrency community for her anti-crypto stance. In 2022, the ECB chief argued that cryptocurrencies are “worth nothing” because the assets are “based on nothing.” In 2021, the ECB president also predicted that central banks worldwide would not be holding Bitcoin anytime soon.
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While criticizing cryptocurrencies like Bitcoin, Lagarde has emerged as a major fan of the concept of the central bank digital currency (CBDC). In April 2023, Lagarde admitted that a potential digital euro would be used in a “limited” way to control day-to-day payments.
This is a developing story, and further information will be added as it becomes available.
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Agustín Carstens called CBDCs the “central element” of central bank leadership in innovation.
Central banks have a responsibility to keep pace with the digital age and lead innovation, Agustín Carstens, general manager of the Bank for International Settlements (BIS), believes.
In his opening remarks at a conference in Basel, Switzerland, on Nov. 8, Carstens called central bank digital currencies (CBDCs) the “central element” of this leadership, elaborating on the potential threats and challenges to implementing them.
One particular challenge is the variety of technological infrastructures different countries intend to develop for their CBDC projects. Carstens also mentioned cyber risks and new possibilities for “criminal activities by unscrupulous actors.”
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Speaking of the priorities in adapting the CBDCs to potential threats, the official named the flexibility of its design as the number one issue, but he also mentioned privacy problems:
“Maintaining an appropriate level of privacy, for example, will be crucial to ensuring public acceptance of retail CBDCs.”
Carstens pledged BIS support for central banks in their efforts to go digital. This support comes primarily from the BIS Innovation Hub and Cyber Resilience Coordination Centre.
The former has been active recently, participating in numerous digital currency projects. It is helping the Swiss National Bank to develop a wholesale CBDC, as well as helping to build a joint platform with the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates and developing a proof-of-concept for a transactions tracker with the European Central Bank, among numerous other projects.
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Project mBridge has put together a slick publication with lots of new information to let the world know what the hottest project in CBDC is.
The Bank for International Settlements (BIS) released a colorful and fact-filled Project mBridge update on Oct. 31. The publication combines technical and promotional discussions in a shift of tone as the project prepares to become a minimum viable project for commercial launch next year.
The update gathers a significant amount of information about the central bank digital currency (CBDC) bridge that had been scattered or completely unavailable until now. The governance structure is explained in general terms, and technical details are slipped into the text at a level of readability that makes it accessible to non-specialists.
A next envisaged stage in Project #mBridge is whether the tested platform can become a minimum viable product, with continued work on the technology, legal and governance, and welcoming new participants and use cases. Read the new report: https://t.co/dzQCxz9UYL #BISInnovationHub pic.twitter.com/4ZtHDrERK8
— Bank for International Settlements (@BIS_org) October 31, 2023
The update explains the project’s use of the Dashing consensus algorithm, which was introduced earlier this month and had previously only been announced in Chinese-language media. It describes it as:
“A Byzantine Fault Tolerance (BFT) consensus protocol that uses proofs of partial confirmation of a block validation to reduce the time needed to achieve consensus and to improve the overall protocol performance.”
The use of legal entity identifiers for Anti-Money Laundering and Countering the Financing of Terrorism is also new information.
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The technical information is sandwiched in text that is, at least by the standards of central banking, blatantly promotional:
“With Project mBridge, the number of steps [in cross-border payments] can be significantly reduced by allowing direct, bilateral connectivity between the payee’s and payer’s local banks supported by interoperability with participants’ domestic payment systems.”
One of the bigger revelations in the update is a list of observer organizations in the project. Their presence was known before but never specified. There are 25 observers, which include central banks and organizations such as the International Monetary Fund and Federal Reserve Bank of New York. Eleven of them are active in the project’s sandbox. Their identities were not revealed.
Project mBridge was initiated in 2021 by the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates in partnership with BIS. It announced plans for its commercial launch in September. This publication calls "see[ing] if the platform tested can evolve to become a Minimum Viable Product" the project's next step.
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Uncertain regulatory conditions continue to have a negative impact on the sustainable growth of the DAO ecosystem, revealed a new European Central Bank occasional paper.
Decentralized autonomous organizations (DAOs) need a comprehensive regulatory framework if they are to make a place in the future of the financial sector, suggests the European Central Bank (ECB) occasional paper (OP).
The OP “The future of DAOs in finance - in need of legal status,” authored by Ellen Naudts, Market Infrastructure Expert Payments at ECB, highlighted how technology outpaced regulation in relation to DAOs — having a negative impact on the safety and sustainable growth of the ecosystem.
As DAOs continue to flood the market with unique offerings, enforcing a “registration framework that was built for a pen-and-paper era” fails to address the various liabilities they present to investors.
“Until DAOs are adequately regulated globally, in the sense that the abovementioned challenges have been solved so that they do not and will not in future pose a serious threat to financial stability, payments and securities systems operate smoothly and consumers are properly protected, the place for DAOs in the financial sector of the future will necessarily remain limited,” the paper concluded.
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Concurrent with calls to establish a regulatory framework, ECB executive board member Fabio Panetta recently said the digital euro could “put Europe at the forefront of advanced economies.”
A digital euro would be a new form of central bank money, says Executive Board member Fabio Panetta. It is now up to legislators to ensure it would replicate key characteristics of cash in the digital sphere, particularly its privacyhttps://t.co/nQJzYylwpV
— European Central Bank (@ecb) September 4, 2023
1/3 pic.twitter.com/4XPlk83Lwj
Panetta supported the European Commission’s legislative proposals for the digital euro, stating that it would ensure Europeans always have access to a public payment option, whether cash or digital, even as “closed-loop solutions are becoming increasingly prevalent” in private payment services.
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New numbers on the global banking system are shedding light on just how much money depositors have pulled out of their bank accounts in the last year. According to the latest data from the Federal Reserve of St Louis, US banks have faced $605 billion in deposit flight in a year. And total deposits at […]
The post Banks Suffer $1,555,000,000,000 in Deposit Flight in One Year As JPMorgan Chase and Financial Giants Fight for Wealthy Clients: Report appeared first on The Daily Hodl.
Private payment services can gain a monopoly over services with no benefit to other market players or economic stability, ECB board member Fabio Panetta said.
The European Central Bank (ECB) is quite happy with the European Commission's (EC) legislative proposals for the digital euro. ECB executive board member Fabio Panetta told the European Parliament’s Committee on Economic and Monetary Affairs in a speech on Sept. 4 that the proposals “put Europe at the forefront of advanced economies” in CBDC development, potentially heading off private dominance of the financial sector and the ills that implies.
The EC made its proposals public on June 28. Panetta, a critic of cryptocurrency, called the EC proposals for the euro central bank digital currency (CBDC) “a new paradigm for preserving monetary sovereignty” that would ensure Europeans always have access to a public payment option, whether it was cash or digital, even as “closed-loop solutions are becoming increasingly prevalent” in private payment services. Panetta compared private payment systems to private messaging, where users are pressured to join the most popular systems.
A digital euro would be a new form of central bank money, says Executive Board member Fabio Panetta. It is now up to legislators to ensure it would replicate key characteristics of cash in the digital sphere, particularly its privacyhttps://t.co/nQJzYylwpV
— European Central Bank (@ecb) September 4, 2023
1/3 pic.twitter.com/4XPlk83Lwj
The EC proposed giving the digital euro the status of legal tender, making its acceptance for payment mandatory. Panetta also praised the EC’s privacy proposals for the digital euro. He specified:
“The Eurosystem would be unable to see the personal details of digital euro users or connect any payment information to private individuals. Intermediaries would only see the user information needed for onboarding and compliance with existing regulation.”
“Furthermore, the possibility to pay offline would provide cash-like privacy, with neither the intermediary nor the central bank processing the payment,” Panetta said.
The proposals also included reasonable pricing policies and allowing the ECB to maintain equilibrium in the financial systems with tools like holding limits. Panetta said:
“Let me emphasise, once again, that the issuance of a digital euro represents an opportunity, not a risk, for the European financial sector.”
The alternative to introducing a CBDC is not maintaining the status quo. Rather, it is losing ground to new private solutions that could impact the economy, Panetta said. He held PayPal’s recently introduced PYUSD stablecoin up as an example of potential risk.
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Private payment service providers seek to gain market share and have no motivation to restrict their range of services or make them compatible with other services. As a result, a private service could attain a monopoly position on the market, as has happened before, Panetta explained.
In contrast, the digital euro “would pay due attention to orderly adjustments in the financial sector while offering payment service providers a platform for innovations with pan-euro area reach,” he said.
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Banco de España Deputy Gov. Margarita Delgado voiced concern about financial stability issues but painted a rosy picture for nonbank financial service providers.
Deputy Governor of the Bank of Spain Margarita Delgado spoke to university students and others about the introduction of the digital euro in Pamplona on Aug. 25. Looking into a future through the lens of the European Commission’s recently proposed digital euro legislative plan, she spoke at length about how private payment solutions will interact with the digital euro and its infrastructure.
The digital euro can help the European Union overcome challenges such as cross-border payment barriers, the costs to businesses of using private payment service providers (PSPs) and the general lack of PSPs in Europe. The development of central bank digital currencies and stablecoins elsewhere could make the last problem worse without the introduction of the digital euro. She said:
“We believe there is enough space for a digital euro and private payment solutions to co-exist. […] In fact, our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions.”
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The digital euro would not be covered by common deposit insurance until a common supervisory and resolution authority is put in place under the European deposit insurance scheme. Financial security has to be considered before the digital euro is launched, Delgado added.
Continuamos con la tradicional mesa redonda sobre política monetaria con Margarita Delgado, subgobernadora del Banco de España, @burkhardbalz, miembro del Comité Ejecutivo del BundesBank, Ángel Nigorra, director general de Bizum España, y @PabloZalba, comisario de los CEV. pic.twitter.com/Q05tFeaK17
— Equipo Europa (@Equipo_Europa) August 25, 2023
The European Central Bank (ECB) foresees getting the digital euro up and running in the eurozone before expanding its reach. The retail use of the digital euro outside the eurozone will provide new opportunities for private PSPs to serve as intermediaries, Delgado noted.
The ECB has its own wish list for the regulation of PSPs. Delgado said:
“It [the ECB Eurosystem] has also called on regulators to act in order to require payment service providers to make the digital euro available to the broad population.”
The ECB will request that PSPs offer a digital euro physical payment card as well.
PSPs will be banned from charging fees for basic services or requiring a contractual agreement before providing access to the digital euro under the proposed regulation. They will be required to provide onboarding support for members of vulnerable groups, “including the availability of human interaction to guide users through onboarding and transaction execution.”
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