„Bitcoin will never replace cash“: Bundesbank with the crypto rejection
In an interview, Bundesbank board member Burkhard Balz rejected Bitcoin reserves on the part of the German central bank. He also gave insights into the planning of the e-euro.
After announcing in early March that it had not made a profit for the first time since 1979 as a result of the Corona pandemic, the German central bank has now Crypto Comeback Pro rejected the idea of building up Bitcoin reserves in a website post. Specifically, this is an interview with board member Burkhard Balz.
Balz criticises 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 fulfil the function of money at all. The comparison with gold is also wrong, as the precious metal has an intrinsic value that has been preserved over 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When asked whether certain criteria used by the Bundesbank to measure Bitcoin and Co. were not outdated, the board member replied:
Certainly not. At its core, it is about people being able to trust a currency. Only if they have confidence will prices remain stable. Establishing this confidence is the most important task of central banks.
Burkhardt Balz to Wirtschaftskurier
How trust in conventional fiat currencies differs from trust in crypto-assets, however, Balz left unanswered. For him, however, it is clear that a stable monetary value is essential for a national economy. Bitcoin, with its high volatility, cannot reliably guarantee this. This is not changed by the fact that BTC can look back on a continuous increase in value. It remains a speculative object for which anything is possible, up to and including total loss.
Bitcoin petition off the table
With the Bundesbank’s clear stance on Bitcoin and Co., Sven Hildebrandt’s petition is probably also off the table. Together with Fabian Friedrich, the initiator of the Blockchain Europe Conference, they are calling on the Bundesbank to build up Bitcoin reserves in addition to gold reserves, as the cryptocurrency is increasingly establishing itself as Gold 2.0 and has many gold-like properties. So it is quite obvious to diversify one’s holdings somewhat with digital gold.
Hildebrandt suggests a Bitcoin addition of 1 to 5 per cent to the other reserve assets. Finally, he also acknowledges Bitcoin’s high volatility. He had talked to BTC-ECHO in detail about the petition in an interview. However, Hildebrandt’s hopes may have been dashed with the Bundesbank’s latest statements – at least for the time being.