European Central Bank executive board member Benoît Cœuré said this week that blockchain is promising – but that bitcoin is “the evil spawn of the financial crisis.”
Speaking at the Economics of Payments IX conference on Thursday, Cœuré, who is also the chair of the Committee on Payments and Market Infrastructures at the Bank for International Settlements, addressed the rising awareness of cryptocurrencies and their use as part of a broader speech on the 10 year anniversary of “the Lehman debacle.”
“In more ways than one, bitcoin is the evil spawn of the financial crisis,” he said, noting that the bitcoin genesis block included a headline about the U.K.’s chancellor bailing out banks.
That being said, he added that “bitcoin was an extremely clever idea.”
However, Cœuré appears to believe that the underlying blockchain technology may be a better idea than bitcoin itself, saying:
“Sadly, not every clever idea is a good idea. The opportunities of the blockchain are many, but the problems of bitcoin are also plentiful. I believe that Agustín Carstens summed its manifold problems up well when he said that bitcoin is ‘a combination of a bubble, a Ponzi scheme and an environmental disaster.'”
Despite bitcoin’s issues, central banks can take advantage of distributed ledger technology to possibly issue central bank-backed digital currencies (CBDCs), he went on to add.
Some banks have already begun exploring the concept of central bank digital currencies, with 69 percent of central banks already – or at least planning to in the near future – studying how these may be used to aid national monetary systems.
In particular, he said, about 57 percent of central banks already studying CBDCs see two main potential applications. The first is specifically for high-value transactions, such as interbank transfers, whereas the second would be more general, for everyday consumers to spend.
Banks are also finding that there is “a potential for cross-border remittances-related payment services” aspect.
“There is broad agreement that a CBDC, in whatever form, is unlikely to be issued within the next decade, even among those four central banks that have indicated that they have reached the stage of developing a pilot project,” he said.
Benoît Cœuré image via Aron Urb/Wikimedia Commons