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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

What people want – ignore at your peril

Global economy: ‘we must do everything possible’ to avoid global ‘fracture’ caused by US-China tensions, urges Guterres

Aid teams respond to escalating southwest Syria conflict: 750,000 civilians are at risk

What happens when you toss your water bottle in the trash?

The European Brain Drain: a truth or a myth?

Tax crimes: special committee calls for a European financial police force

Large parts of the world are growing more fragile. Here are 5 steps to reverse course

‘Emulate his example’ urges UN chief as world celebrates Nelson Mandela: a ‘global advocate for dignity and equality’

Why South Africa is on a path of economic renewal

Can agroforestry save India’s rivers and the farms that depend on them?

Action needed to tackle stalled social mobility

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

Financial inclusion in India is soaring. Here’s what must happen next

Statement by President Tajani on US steel and aluminium duties

European Business Summit 2014 Launch Event: “Energising Industrial Growth”

European Parliament approves more transparency and efficiency in its internal rules

IMF – World Bank meetings: US – Germany clash instituted, anti-globalization prospects visualized

Terrorism ‘spreading and destabilizing’ entire regions, Guterres warns States, at key Kenya conference

Finland must focus on integrating migrant women and their children to boost their contribution to the economy and society

Gender Equality as a platform to improve Medicine

Medicine and mental health: relax, the doctor is a lifelong learner

5 ways to make your organization a great sustainability partner

Unity, regional cooperation and international support needed for Horn of Africa to develop sustainably

Anti-vaccers: does the empty can rattle the most?

UN police officer recognized for protecting vulnerable Somali women from abuse

Rohingya refugee shelters ‘washed away’ in Bangladesh monsoon rains: UN agency

CO2 can be a valuable raw material, not just a climate killer. Here’s how

There is a mental health crisis in entrepreneurship. Here’s how to tackle it

Egypt: The road to hell paved with western advices for democracy

China’s cities are rapidly becoming more competitive. Here’s why

A small group of world leaders are standing together against inequality

UN chief condemns air strike that hit school bus in northern Yemen, killing scores of children

Myanmar doing too little to ensure displaced Rohingya return: UN refugee agency chief

Here’s what you need to know about the UK’s booming second-hand economy

WEF Davos 2016 LIVE: “We need more Schengen but reinforce control!”, France’s Minister of Economy Emmanuel Macron emphasises from Davos

Amid ongoing fighting in northeast Syria, hundreds cross Iraqi border in search of safety

Why impoverishment and social exclusion grow in the EU; the affluent north also suffers

Newly displaced fleeing attacks in northeast Nigeria, top 2,000

We must stop turning a blind eye to the world’s health crises

The next generation is key for a European renaissance

World Population Day: ‘A matter of human rights’ says UN

Toni Morrison: 10 quotes you should know

Why practicing medicine privately at home is still a (difficult) option?

These will be the main cybersecurity trends in 2020

More than four in 10 women, live in fear of refusing partner’s sexual demands, new UN global study finds

Why the fight against nature loss should be a business priority

Four in 10 indigenous languages at risk of disappearing, warn UN human rights experts

Why are the Balkans’ political leaders meeting in Geneva this week?

The Dead Sea is drying up, and these two countries have a plan to save it

We lack a global framework for saving our environment. Here’s how we change that

No more lead in PVC to protect public health, say MEPs

Energy: new ambitious targets on renewables and energy efficiency

These patients are sharing their data to improve healthcare standards

5 technologies that will forever change global trade

The global economy isn’t working for women. Here’s what world leaders must do

Can self-charging batteries keep us connected for ever? A young scientist explains

WEF Davos 2016 LIVE: Banking moguls continue brandishing financial Armageddon to intimidate us all but in Davos they worry about the very distant future

Germany’s fiscal and financial self-destructive policies

270 million people are migrants, who send home a staggering $689 billion

3 ways Africa can improve the health of women and children

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