Crypto Still Needs Fiat Currencies as Part of Its Backstop: ECB's Benoit Coeure

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Thu, 02/20/2020 - 14:47
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Alex Dovbnya
ECB's Benoit Coeure believes that central bank currencies will remain at the core of the system even with the advent of digital currencies
Crypto Still Needs Fiat Currencies as Part of Its Backstop: ECB's Benoit Coeure
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French economist Benoit Coeure, who's also a member of the Executive Board of the European Central Bank, believes that currencies issued will remain at the backbone of digital assets. In a recent interview with CNBC Asia, he mentioned that it would help ensure the stability of the system.

"It will be part of the backstop because that's what's needed for the stability of the system," Coeure said. 

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No clear approach to regulations

Cryptocurrencies still largely remain in a regulatory grey zone. If cryptocurrencies are recognized as an investment proposition, they will be regulated as mutual funds and ETFs. 

In the meantime, if regulators view digital assets as payments, they should be treated accordingly.       

As reported by U.Today, Coeure will spearhead a task group that was created by major central banks to explore the viability of CBDCs.

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Fiat assets need to evolve 

Coeure emphasized that a prerequisite to maintaining the stability of the financial system is the availability of fiat currencies at its backbone. He also noted that central bank currencies need to evolve to remain in that position, and their tokenization can be one of the possible solutions.   

"It might have to evolve to be part of the backstop. It might have to be tokenized, it might have to take different forms but it will remain at the core of the system."       

U.S. Federal Reserve Chairman Jerome Powell recently revealed that every major central bank was exploring digital currencies.   

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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.