The director of the European Central Bank (ECB) has told banks that they must introduce instant payments to beat the rising popularity of bitcoin.
Over the last few months, bitcoin’s rising value – going as high as $11,000 toward the end of November – is gaining prominence in mainstream media. As a result, several central banks and authorities have issued their feelings on the topic.
James Gorman, Morgan Stanley CEO, has gone as far as saying that those who believe the digital currency is a safe investment are ‘deluding themselves.’ Whereas, Lee Nak-yeon, the South Korean prime minister, said yesterday that the cryptocurrency will lure children into committing illegal activities.
Yet, with bitcoin clawing its way back up to $10,000 – after a major selloff saw its price drop to $9,200 – Yves Mersch, a member of the ECB’s executive board, has said that banks need to consider an alternative to remain competitive, reports the Independent.
At an event in Rome, he said:
Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.
His comments, however, come at a time when Mario Draghi, the ECB’s president, has stated before that the rise of cryptocurrencies, such as bitcoin, don’t pose a threat to the central bank. Last month, speaking to the European Parliament, Draghi said:
We think all this is pretty limited. So it’s not yet something that could constitute a risk for central banks.
Vitor Constancio, ECB’s vice president, has also given his view on digital currencies. So much so, that he doesn’t believe that they can ever ‘prevail as general money substitutes.’
Despite this, though, it appears that the ECB may be putting into motion the possibility of experimenting with digital coins, according to Mersch, adding:
We shall also experiment with cash on different digital technologies. Other adventurous applications of a more disruptive nature are simply not robust enough.
According to Michael Corbat, CEO of Citigroup, he believes that governments will eventually have to issue their own state-sponsored digital currencies in order to prevent bitcoin from becoming a threat to the financial establishment.
Speaking last month at a summit in New York, Corbat said:
It’s likely that we’re going to see governments introduce, not cryptocurrencies – I think cryptocurrency is a bad moniker for that – but a digital currency.
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