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.
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.