Bundesbank President Joachim Nagel emphasized the necessity of a state-controlled digital euro to mitigate private sector influence in global finance.
At an OMFIF event at the London School of Economics, he cautioned about the risks associated with Bitcoin and advocated for developing central bank digital currencies (CBDCs).
Nagel dismissed Bitcoin as a speculative asset rather than a viable currency, likening it to a modern-day version of the 17th-century Dutch tulip mania. He criticized its transparency and argued that it is unsuitable for central bank reserves.
“This is not something central banks should look at. This is not a liquid form of something you want on the balance sheet. We should be very cautious here,”
Nagel stated.
He expressed concern over foreign-controlled payment systems, warning that they could be weaponized in a digital landscape, though he did not provide further details.
Nagel advocates for the digital euro to enhance Europe’s financial resilience and maintain monetary independence in a digital economy. He emphasizes central banks’ need to retain control over financial systems to limit private entities’ influence. At the DZ Bank Capital Markets Conference, he also reassured attendees that institutions handling digital euro transactions would not access users’ personal or transaction data for commercial purposes unless users explicitly allow it.
In contrast, Ales Michl, the central bank governor of the Czech Republic, has proposed considering Bitcoin as a reserve asset, which has garnered support from crypto advocates. However, this idea faces opposition from ECB President Christine Lagarde.
“Reserves have to be liquid, secure, and safe,”
Lagarde remarked, rejecting the notion of Bitcoin as a viable reserve asset. Despite opposition, the Czech National Bank’s board commissioned a study on the feasibility of Bitcoin in its reserves. However, reports suggest the study could take months, and even if it supports Bitcoin adoption, any exposure is expected to remain minimal—potentially under 1% of total reserves, far below the initially proposed 5%.
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