The Economic and Monetary Affairs Committee of the European Parliament (ECON) published a report on competition in the fintech industry a few days ago. Interestingly, the emphasis was on cryptocurrencies. The document presents the idea of issuing digital coins by central banks.
The developers of the report do not have a very good opinion of Bitcoin, but also emphasize its importance. They describe the main cryptocurrency as “technological and operational dogma, which is a source of distortions for the entire sector, including monetary policy and financial stability”. They see big potential in Blockchain technology. Although it sounds standard, it still gets more interesting.
ECON believes that cryptocurrencies created by individuals or companies are subject to a different legal definition than those that would potentially be issued by central banks. Transactions concluded with the use of digital coins of central banks will – unlike bitcoin – be able to offer “bilateral consent with a trusted central authority”.
Improve the system?
The authors of the report probably do not like the specifics of cryptocurrencies, especially the fact that they function without central authority. In their opinion, they require the supervisory authority despite this. This is probably the reason why central banks may consider “authorizing cryptocurrency systems” to “supplement or replace” already existing e-currencies with something else. ECON believes that it is possible to change the current level of competition on the cryptocurrency market by adding new elements to the pool, different from the classic cryptocurrencies.
The report also notes potential competition and the fight for the community on the market of portfolios, stock exchanges and exchange offices. They can create such practices that prevent other entities from entering the market, among others through cooperation with miners who favor a specific cryptocurrency.
Will the ECON study convince the European Union to tighten regulations that would reduce the monopoly of leading digital currencies?
The G20 also returns to the topic of cryptocurrency. However, the state group is still unable to determine its exact position for digital currencies. The Special Action Group on Money Laundering (FATF) recognizes the need to create regulations on crypto-activites.
The topic comes back now after 4 months of consultation. At that time, representatives of the G20 countries said they were obliged to create so-called “very specific recommendations” regarding the approach to the sphere of cryptocurrencies at the international level. However, nowadays it seems that this item has been significantly softened.
G20 sees both the technological advantages of the phenomenon, but also the threats arising from the integrity of the market, tax evasion, money laundering and terrorist financing.
Earlier this month, the French government, led by Finance Minister Bruno Le Maire, called the G20 to debate on cryptocurrencies and recommended avoiding direct, quick regulation.