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Wednesday, June 21, 2017

One of the world's top central bankers warns digital currencies like bitcoin could worsen future financial crises

One of the world

Jens Weidmann, the head of Germany's Bundesbank and one of the most powerful figures in European finance, has warned that digital currencies like bitcoin have the potential to make financial crises in the future even more devastating.

 

Speaking in Frankfurt on Wednesday, Weidmann said he believes that central banks will eventually create their own digital currencies to reassure average citizens that such currencies are safe and stable, but in doing so could increase the risk of bank runs in future crises.

 

"Allowing the public to hold claims on the central bank might make their liquid assets safer, because a central bank cannot become insolvent," Weidmann said in a speech largely focused on the European Central Bank's QE programme.

 

"This is a feature which will become relevant especially in times of crisis - when there will be a strong incentive for money holders to switch bank deposits into the official digital currency simply at the push of a button. But what might be a boon for savers in search of safety might be a bane for banks, as this makes a bank run potentially even easier."

 

Full story at http://read.bi/2rB6EmY

 

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