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"Bitcoin will never replace cash": Bundesbank with the BTC rejection
In an interview, Bundesbank board member Burkhard Balz rejected bitcoin reserves from the German central bank. In addition, he gave insights into the planning of the E-Euro.
After the Bundesbank announced at the beginning of March that it had not made any profits for the first time since 1979 as a result of the corona pandemic, the German central bank now refused to build up Bitcoin reserves in a website article. Specifically, it is an interview with board member Burkhard Balz.
Balz criticizes cryptocurrencies as “highly speculative assets” that are neither suitable as a means of payment nor as a store of value. Bitcoin in particular does not fulfill the monetary function at all. The comparison with gold is also wrong, since the precious metal has an intrinsic value that has been preserved for centuries. Gold offers security and liquidity at all times, Bitcoin cannot keep up. For these reasons, Balz considers it extremely unlikely that the Bundesbank will ever build up Bitcoin reserves.
When asked whether certain criteria with which the Bundesbank measures Bitcoin and Co. are not out of date, the board member replied:
Certainly not. At its core, it is about people being able to trust a currency. Only if you have confidence will prices remain stable. Establishing this trust is the most important task of the central banks.Burkhardt Balz opposite Wirtschaftskurier
However, Balz left unanswered to what extent trust in conventional fiat currencies differs from trust in crypto assets. For him, however, it is clear that a stable monetary value is essential for an economy. Bitcoin cannot reliably guarantee this with its high volatility. That will not change due to the fact that BTC can look back on a continuous increase in value. It remains an object of speculation, in which everything is possible up to a total loss.
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Bitcoin petition off the table
With the clear stance of the Bundesbank towards Bitcoin and Co., Sven Hildebrandt's petition is probably off the table. Together with Fabian Friedrich, the initiator of the Blockchain Europe Conference, they call on the Bundesbank to build up Bitcoin reserves in addition to gold reserves, since the cryptocurrency is becoming more and more established as Gold 2.0 and has many gold-like properties. So it is quite obvious to diversify your holdings with digital gold.
Hildebrandt suggests adding 1 to 5 percent Bitcoin to the other reserve assets. Finally, he also recognizes the high volatility of Bitcoin. He had discussed the petition in detail with BTC-ECHO in an interview. Hildebrandt's hopes are likely to have been dashed with the latest statements by the Bundesbank - at least for the time being.
Bundesbank lets through the decision-making period for e-euro
In addition to criticizing Bitcoin, the board member of the Bundesbank also gave his opinion on the ECB's digital currency plans. In his view, a single digital central bank currency in the euro area would have the advantage that citizens could submit their claims directly to the Eurosystem. However, with the introduction of an e-euro, commercial banks could only play a minor role.
Balz is currently part of the working group that deals with the E-Euro. In the interview he said that the topic is currently still being discussed. The Governing Council will then make a decision in early summer. In addition, the central banker believes that cash will never disappear entirely. It is a store of value in times of crisis and offers “a piece of freedom” in times when the citizen is becoming more and more transparent.
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