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Crypto Has No Reason to Exist, Says ECB's Fabio Panetta

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Fri, 12/10/2021 - 14:44
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Alex Dovbnya
Cryptocurrencies are useless and harmful, according to ECB's Fabio Panetta
Crypto Has No Reason to Exist, Says ECB's Fabio Panetta
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Fabio Panetta, an executive board member at the European Central Bank, lambasted cryptocurrencies in a lecture published on Dec. 10, arguing that they have no reason to exist:

On the whole, it is difficult to see a justification for the existence of crypto-assets in the financial landscape.

Despite the fact that the total value of the cryptocurrency market topped $3 trillion this year, Panetta asserts that cryptocurrencies are not useful either for society or the economy.

In fact, he claims that crypto has a negative impact on society due to the adverse impact of mining on the environment, criminal activities associated with crypto, as well as a lack of regulatory mechanisms for protecting investors.

Now that cryptocurrencies have achieved such high valuations, they pose significant risks to the global financial system, according to the ECB official.

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Panetta also took aim at fiat-backed cryptocurrencies, reiterating that they are actually "unstable" coins due to solvency issues. However, even if stablecoins were actually fully backed by reserve assets, their issuers would still be interested in making a profit instead of serving the public interest.

He then went on to make a case for launching a central bank digital cryptocurrency that would replace cash as a means of payment:

Central banks must therefore ensure that central bank money is fully usable and can retain its role as a payments anchor. That is the primary objective of the digital euro.

On Dec. 9, Reuters reported that Project Jura, a CBDC trial of the digital euro and Swiss franc between the central banks of Switzerland and France, was a success.

Last month, Evelien Witlox, ING's global director of payments, was hired to spearhead ECB's digital euro program.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.