ECB to people: Not responsible if you lose money on Bitcoin, your governments are

(Photo: :European Central Bank Audiovisual Services)

Last Tuesday, 13 February Mario Draghi, the President of the European Central Bank in the most solemn terms said regulating or even banning Bitcoin “it’s not the ECB’s responsibility to do that”. However, he didn’t refrain from eagerly pointing out the very risky and misty nature of the digital ‘monies’. So, when asked again if one should buy Bitcoins, he replied “Frankly I would think (about buying) it carefully”, using the restricted jargon of central bankers.

He then underlined the fact of Bitcoin’s wild oscillations “much more than the euro’s” and he reminded everybody the cryptocurrencies are not supported by any public body. The ECB officially calls Bitcoin not a currency but a speculative asset. Its official site says “In other words, it is something that you can gamble on to make a profit, but with a risk that you will lose your investment. In short something like a Ponzi scheme.

This is a clear caution by the ECB for the wider public about the extremely risky nature of investing in cryptocurrencies. Draghi was speaking in a video conference, answering questions from the public. The event was organized at the central building of ECB in Frankfurt am Main. Nevertheless, he recognized the value of the blockchain technology, by valuing it as “quite promising” and commented it can generate “many benefits” in settling payments. He observed though that it’s still not safe enough to be used by central banks. It’s made known so far that two major central banks, the ECB and the Bank of Japan have being examining blockchain technology for about a year now.

Not about Bitcoin

This article however is not about Bitcoin and the other cryptocurrencies or what the global banking community is thinking or doing about all that. Such an attempt would greatly surpass the capacities of this writer. This article is about ECB’s attitude and action or rather inaction vis-à-vis the digital currencies. ECB has actually done nothing in relation to the authorization and administrative background, related to the functioning of cryptocurrencies.

Of course, on many occasions members of ECB’s Governing Council and more so some key members of its Executive Board, like Vice President Vítor Constâncio have warned the wider public about the unpredictable and extremely risky character of cryptocurrencies. The ECB has not taken any practical action beyond that point, unlike other central banks. For example, the central banks of China and South Korea have forbidden the fundraising through digital money.

The central Bank of Russia has blocked the websites selling Bitcoins and other digital moneys, while on the contrary the Bank of Japan has recognized the Bitcoin and some other cryptocurrencies as legal tender that is as cash acceptable for all purposes. The ECB has done nothing of that short and last Tuesday Draghi ‘officially’ confirmed this not going to change.

Pointing to governments

Given that digital monies are claims against some elusive private entity – not a central bank – Draghi rushed to ‘counsel’ the wider public about the structurally associated risks. It’s not our job he concluded to mend that. In this way and in a very clear manner he tells the 19 central banks and governments of the euro area member states, that it’s their responsibility to regulate, ban or officially authorize some functions of the cryptocurrencies. Up to now, in the borderless and quite chaotic environment of the World Wide Web a lot of Europeans are buying, selling, generating, investing, exchanging and in general being involved in this affair. No official action has being taken to protect those people or regulate the jungle.

If this unregulated universe continues expanding with the breathtaking tempo it has being growing up to now, there might come a moment where a lot of people could be severely hurt. Actually, this may come at any moment. In view of this dreadful prospect, this week Draghi  indirectly but quite clearly made the 19 central bankers and the governments of Eurozone responsible. He indirectly but loudly left it to be understood it’s up to them to regulate or why not altogether or partially ban the digital currencies.

ECB’s mandate

If there were more relevant questions addressed to Draghi about this issue, he would have certainly pointed out what the mandate of the ECB is. He has repeatedly underlined the fact that ECB’s only and at the same time exclusive task is to take whatever appropriate measures are needed, to drive the inflation rate close but below to two percent. The ECB serves this purpose with the relevant monetary policy.

Currently though, and in many ways inappropriately, a number of major euro area member states spearheaded by Germany and Holland believe and say so that the ECB should call off its extra relaxed monetary measures (zero interest rates and ample cash injections).

The ‘money bags’

In short, those critics of ECB’s policy are telling Draghi how to do his job, despite his clear and exclusive mandate for it. Not to forget that governments are institutionally asked to avoid meddling in it. The reason for their interference is of course that his policy helps the deficitary states of the South to cheaply refinance their debts and support growth. At the same time it denies any interest on deposits for the ‘money bags’ of the Union.

Obviously the salvation of some member states and ultimately of the single money itself are more important targets, than the interest rate on someone’s rich deposits. So the questions about the Bitcoin affair offered Draghi a pretty good chance, to remind to his critics that they have better take care of their neglected obligations, than illegally meddling in his monetary policy.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

New Report Offers Global Outlook on Efforts to Beat Plastic Pollution

How fintech is making investment accessible

European Fund for Transition to support more workers made redundant

Luxembourg has achieved high levels of growth and well-being but must do more to preserve and share prosperity

The world wide web is 30 years old. What better time to fight for its future?

New legislation on transparency and sustainability of the EU risk assessment model in the food chain

Free flow of non-personal data: Parliament approves EU’s fifth freedom

The global economy is woefully unprepared for biological threats. This is what we need to do

Do you dare to go to China?

Agreement reached on screening of foreign direct investment for EU security

You’ve heard of 5G, but what about the quantum internet?

Poliomielitis: climatic changes and impossibility in border control

Nitrate pollution of water sources: new impulses for EU Water Policy?

What is adversarial artificial intelligence and why does it matter?

The Parliament defies a politically biased Banking Union

What brands get wrong about China – and how to put it right

The EU Commission openly repudiates the austere economic policies

Ukraine’s new political order not accepted in Crimea

2019 EU Budget: Commission proposes a budget focused on continuity and delivery – for growth, solidarity, security

Discussion at Europe House: Brexit & Food

Drastic deterioration in security across Burkina Faso as 70,000 flee their homes in past two months, UN warns

This AI outperformed 20 corporate lawyers at legal work

Gender Equality and medicine in the 21st Century: we want the fair share

OECD presents revised Codes on capital flows to G20

Palestinian Bedouin community faces demolition after Israeli court ruling, warns UN rights office

Global Trade Identity can be the cornerstone of paperless trade

Why Italy will not follow the Greek road; Eurozone to change or unravel

If people aren’t responding to climate warnings, we need to change the message

Stable growth momentum in the OECD area

Germany tries to save Europe from war between Ukraine and Russia

These are the biggest risks facing our world in 2019

Under fire, UN refugee agency evacuates 135 detained in Libya to Niger

Meet the robot fighting back against coral reef destruction

Commission caps charges on card and Internet payments and enforces competition

“None of our member states has the dimension to compete with China and the US, not even Germany!”, Head of EUREKA Pedro Nunes on another Sting Exclusive

“China will strive to enhance the performance of economic growth”, President Xi highlights from the World Economic Forum 2017 in Davos

European Youth, quo vadis?

Commission calls on Leaders to pave the way for an agreement on a modern, balanced and fair EU budget for the future

Why banks escape from competition rules but not pharmaceutical firms

A Sting Exclusive: Disaster risk resilience, key to protecting vulnerable communities

YO!FEST ENGAGES 8,000 YOUNG EUROPEANS IN FUTURE OF EU

‘Immense’ needs of migrants making perilous journey between Yemen and Horn of Africa prompts $45 million UN migration agency appeal

This is how we inspire young people in the Middle East to join the fight against climate change

How can newspapers survive? By measuring their social impact

TTIP 9th Round marked by American disappointment: Will some optimism save this trade agreement?

EU-Turkey deal on migrants kicked off but to who’s interest?

Asia-Pacific showing ‘decisive leadership’ on road to 2030 Sustainable Development Goals, deputy UN chief tells key forum

Is the European Banking Union an impossible task?

Plastic is a global problem. It’s also a global opportunity

Microsoft says the internet is getting a little nicer

In Gaza, UN envoy urges Israel, Palestinian factions to step back from brink of a war that ‘everybody will lose’

Is Germany’s political landscape becoming a breeding ground for extremism?

Where do Americans stand on immigration? They’re not as divided as you might think

I cycled over 6,000km across the United States to document climate change. Here’s what I learned

EU-China relations under investigation?

‘Stay together and step up’ action to meet Global Goals, ECOSOC President tells development forum

“Austerity was not the alternative!”, President Hannes Swoboda of the European Socialists and Democrats on another Sting Exclusive

Financing the 2030 Agenda: What is it and why is it important?

Murder of Brazilian indigenous leader a ‘worrying symptom’ of land invasion

This is what you need to know about the Iran nuclear deal

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s