Although crypto currencies are yet to go mainstream, the fantastic appreciation of the value of the Bitcoin is pushing many central banks to issue their own digital currency.
On Thursday, Yves Mersch, a member of the European Central Bank’s executive board stated, if banks were to speed up the introduction of instant payments it would go a long way to curtail the allure of digital currencies, including the Bitcoin.
With the value of the Bitcoin zooming past $11,000, cryptocurrencies have gained significant prominence
Although Mersch has dismissed digital tokens, he has urged commercial banks to provide an alternative to them.
“Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes,” said Mersch.
Although their adoption by retailers is still marginal, private digital currencies are a source of worry for central bankers since they threaten their control over the banking system and money supply, both of which are fundamental tools in monetary policies to manage inflation.
This is the reason why some central banks, including UK’s Bank of England and Sweden’s Riksbank are weighing the merits of introducing their own digital currency.
Mersch said the ECB would “experiment with cash on different digital technologies” but did not see scope for “adventurous applications” of such technology.
“We shall also experiment with cash on different digital technologies,” said Mersch. “Other adventurous applications of a more disruptive nature are simply not robust enough.”
His comments were echoed by Carl-Ludwig Thiele, a member of Bundesbank’s board who said a digital currency, such as Sweden’s proposed eKrona, is unlikely to be introduced in Germany, where cash payments are still prevalent.
“The issue of digital central bank money is in our view not a realistic option for the foreseeable future,” said Thiele at an event.