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May 29, 2014updated 04 Apr 2017 4:07pm

Member of the European Central Bank speaks out against Bitcoin

Yves Mersch, an executive board member of the European Central Bank (ECB), has spoken out against crypto-currency Bitcoin and defended the Euro as the official currency of many EU countries.

By Rozenn Le

Yves Mersch, an executive board member of the European Central Bank (ECB), has spoken out against crypto-currency Bitcoin and defended the Euro as the official currency of many EU countries.

He explained that, although Bitcoin allows direct payments between participants, without a bank as an intermediary and thus eliminating bank charges, exchange rate losses can cancel out this advantage.

"For example, the Bitcoin exchange rate, determined by supply and demand, slumped from €170 ($231.48) to €70 in April 2013 after the Bitcoin exchange temporarily suspended trading and triggered panic selling," he said.

"Since the Bitcoin trading platforms are not regulated, 100% losses are also possible," he added.

According to Mersch, there are a maximum of 2m Bitcoin users worldwide and only a few thousand businesses and service providers which accept the virtual currency.

He continued: "Due to the very limited use of virtual currencies they compete neither with the banking sector’s payment systems nor with euro banknotes.

"The examples illustrate the superior characteristics of Euro cash: its value is guaranteed by the ECB and the national central banks of the Eurosystem and it can be used throughout the Euro area – and beyond – for payments.

"The Euro owes its international role to its reputation as a stable anchor of value. The debt crises of recent years have done little damage to its good reputation," concluded Mersch.

The recent results of this month’s European elections showed that Euro-scepticism is growing in a number of countries.

In France, Denmark and in the UK, Euro-sceptic parties have scored higher than the traditional strong politic parties. In France, the Front National (FN) won 25% of votes and 24 seats, before the Union pour un Mouvement Populaire (UMP) with 21% and Socialist Party with 14%.

Marine Le Pen’s FN is well known for its position against a European currency union.

In the UK, Nigel Farage’s UK Independence Party saw 23 of its candidates sent to the European Parliament, while Labour and the Conservatives only won 18 seats each.

The Danish People’s Party scored nearly 27% of votes in Denmark.

Despise this unprecedented victory from the far-right Euro-sceptic parties, the European Parliament is still held in majority by pro-Europeans from centre-right and centre-left political families.

Related articles:

ECB approves new proposed European directive for electronic payments

ECB sets new guide to assess security of Internet payments

Dutch regulators warn against Bitcoin

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