thesonandheir Oct 19, 2016 7:57 AM

A deflationary currency really scares them eh?

the minute it shows any signs of mainstream adoption they powers above will stomp on it

The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income.

Good times  Reminds me when the Central Bank of China was supposed to ban bitcoins several times a few years ago.

Second, given that virtual currencies are not in fact currencies, it would be more accurate to regard them as a means of exchange, rather than as a means of payment. Additionally, the proposed directive’s definition of ‘virtual currencies’ as a means of payment does not take into account that in some circumstances virtual currencies can be used for purposes other than that of a means of payment12. As noted by the Bank for International Settlements (BIS), the distributed ledger technology underlying many digital currency schemes could have a much broader application beyond payments13. In this respect, the FATF has noted that non-payment uses of virtual currencies may include store-of-value products for savings or investment purposes, such as derivatives, commodities, and securities products14. More recent digital currencies, which are based on more sophisticated distributed ledger and block chain technology, have a large array of uses that go beyond payment purposes15, including for example, online casinos In the light of the above, the ECB suggests that the proposed directive also refers to other possible uses of virtual currencies in the proposed definition of that term.

The ECB suggests adapting the definition of virtual currencies under the proposed directive to take the above points into account.

In short, while the ECB would love to ban cash which is a major stumbling block to the bank's NIRP strategy, its proposed alternative is not virtual currencies, despite various such suggestions most notably by the BOE, but merely retaining currency if entirely in electronic form, think only debit and credit card transactions, which in turn allow every single operation and transaction to be tracked (and taxed) by both the central bank and local governments with pinpoint accuracy.