The negatives surrounding crypto far outweigh the benefits

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Gabriel Makhlouf – the governor of the Central Bank of Ireland – believes cryptocurrencies could have a negative impact on European financial stability. He also said the eurozone was on the verge of launching its own CBDC, saying “it’s not a question of if but rather how and when”.

Are digital assets a threat to the EU?

In a recent blog post, CBI Governor Gabriel Makhlouf spoke in a rather contradictory manner about virtual currencies and their function. The main banker has warned that they could pose risks to financial stability. Additionally, digital assets lack transparency, consume a lot of energy, and criminals can use them in illegal operations:

“As it stands, the downsides surrounding crypto far outweigh the pros.”

On the other hand, Makhlouf praised the technology behind Bitcoin, Ethereum, and other virtual currencies. He recalled that they have the potential to reduce transmission costs in the monetary system and eliminate the need for intermediaries in certain transactions:

“But we shouldn’t ignore the positive elements of the underlying technology. Distributed Ledger (DLT) technology is essentially a secure, decentralized record of information stored on a network and is a key part of the architecture for certain types of crypto.

Gabriel Makhlouf, Source: The Telegraph

It should be noted that Gabriel Makhlouf is not the only prominent banker to have recently warned of the risks involved in dealing with cryptocurrencies. Not too long ago, Andrew Bailey – Governor of the Bank of England – argued that digital assets “have no intrinsic value” and people who invest in them can lose all of their money.

The digital euro would be a fundamental change

Speaking about the central bank’s digital currencies, Gabriel Makhlouf believed that the European Union would benefit greatly from the launch of an e-euro. In addition, he said it “would represent a fundamental change in the financial architecture”.

Makhlouf could not specify an exact timeframe for the deployment, but he said he had every chance of appearing soon. He assured that the cash would not disappear but would work side by side with the e-euro:

“And although we have not decided whether a digital euro will be introduced, I think it is very likely. In my opinion, it is not a question of “if” but rather of “how and when”. To be clear, the money will not go away; a digital euro will complete it.

As CryptoPotato reported in mid-July, the European Central Bank (ECB) signaled its intention to launch a digital euro project.

The organization assured that the CBDC would consume less energy than Bitcoin. Its main objective would be to prevent illegal activities and avoid adverse effects on financial stability and monetary policy in the euro area. Like Gabriel Makhlouf, the ECB reassured that the e-euro would supplement cash rather than replace it.

Featured Image Courtesy of TheTimes

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