Source - http://www.reuters.com/article/us-ecb-b ... SKCN12I1HCwants EU lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone.
The ECB went on to say that digital (or crypto) currencies shouldn't be promoted and that they aren't legally considered money. The fear is that if cryptocurrencies continue to be adopted it could weaken the central banks control over the monetary system.
While it's mentioned that the worry is over illegal activities being financed, reading between the lines I really see the issue being more around their ability to maximize taxable funds as well as not wanting to see the monetary power they wield go away.
Not being a fan of there being a global currency controlled by a single entity (like the UN,) the idea of a decentralized and transparent financial system that's free from government control and corruption is quite appealing. The current amount of 'trust us' arguments from the current fiat system just holds less and less water everyday.
Across various news stories on this there seems to be contradictory statements on the ECB's view of cryptocurrency. On the one hand they Central Bank called them "inherently unstable" this report from last year (http://www.coindesk.com/european-centra ... -unstable/) yet on the other describe the technology having "an impact on future monetary policymaking."
The current platform called Target2-Securities, which went live in June 2015, is the "flagship project aimed at providing a single settlement platform across the Eurosystem. It has had many major issues that are yet to be adequately dealt with, forcing many security exchanges and depositories to delay planned moves to adopt this service including:
- The Italian Central Securities Depository who's been delayed since August 2015
Euroclear (Largest International Central Securities Depository) who's been delayed since October 2015
The Bank of England was one of the first in September 2014 to publicly discuss that, "the blockchain as a 'significant innovation' that could have 'far-reaching implications' for financial markets. There really seems to be little doubt in my mind that **even fiat systems are looking to work on blockchain technology.** The concerns really seem to be more around the enforcement capabilities and enforcement of anti-money laundering, taxation and other centralized controls. It should be very interesting to see how central banks try to use blockchain technology with fiat systems, while wanting to have their desired controls in place.
I can easily see this leading down the road of doing away with paper (or any physical) money and requiring it all to be digitized, allowing every single transaction to be tracked and taxed. I don't know about you, but I'm not a fan of somebody having an "off switch" to my funds without having some backup such as cash available.
The final contradiction I see is best summed up by European Central Bank (ECB) executive board member Yves Mersch back in 2014:
Source - http://www.coindesk.com/european-centra ... tive-euro/Although interested parties can very easily download the application for bitcoin, they neither understand how this payment system works exactly, nor the risks they run when using it.
Since when has the end users understanding of a monetary system ever been a major need. Most people don't even realize that their own unit of currency fluctuates in value, let alone the intricacies behind it such as printing unbacked money, effects of inflation, supply and demand on foreign exchanges, and the list goes on. People solely want confidence (even if unfounded) that their money retains value and is easily spendable.
I really see last weeks statement by the ECB as a politicized reaction to the Panama Papers, trying to frame this now public information of Tax Evasion and Money Laundering to solely be the fault of cryptocurrencies. Both of these issues existed well before even Bitcoin was created, yet magically it's now an issue. The desire to require cryptocurrency exchanges and wallet providers to fall in line by applying
Source - http://www.coindesk.com/european-union- ... -response/due-diligence controls which would end the anonymity currently available with such exchanges.
While I don't personally see fiat systems crumbling in the near future, I absolutely see them degrading.
Cryptocurrencies and blockchains are undoubtedly going to be a part of our financial future. My main concern is seeing these controlled by the archaic State Governments rather than through decentralization and transparency. I'm very curious to see how [Monero](https://getmonero.org/) (which I understand hides transaction information) will fit into this mix of what is being publicized as acceptable or not by the old guard.
The Only Thing I Know for Sure is that the Monetary Paradigm is Changing.
[ECB Opinion PDF](https://www.ecb.europa.eu/ecb/legal/pdf ... f_sign.pdf)
[ECB Control of Cryptocurrencies](http://www.coindesk.com/ecb-control-dig ... s-bitcoin/)
[Reuters ECB Report](http://www.reuters.com/article/us-ecb-b ... SKCN12I1HC)
[ECB Potentially Trying Blockchain Technology](http://www.efinancialnews.com/story/201 ... al-markets)
[EU Proposes Tighter Bitcoin Controls after Panama Papers](http://www.coindesk.com/european-union- ... -response/)
[Euro Bank Symbol](https://pixabay.com/en/euro-currency-fi ... pe-165852/)
[The Thinking Man](https://www.flickr.com/photos/39908901@N06/13963173985)