Top German Banker Warns Cryptocurrencies Could Precipitate a Financial CrisisA top German banker, Jens Weidmann, commented Wednesday that digital currencies like bitcoin could cause a financial catastrophe. The banker alluded to the idea digital currencies are unstable and prone to violent fluctuations on the market. Weidmann said for people to expect banks to adopt digital currencies so the average citizen begin to have faith in them. A Business Insider article further suggested the banking system has a leg up on digital currencies, because they have the ability to print as much money as they want. In other words, they can avert a financial collapse by magically creating more liquidity.
The article quoted Weidmann, saying, “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.”
The article’s author also said the banker’s position was that when banks have their own digital currencies, they can use various features to protect the banks from going on bank runs. They could provide people with digital assets so they don’t start taking all their cash out of the bank. The article read:
Weidmann’s basic point is that by making currencies fully digital in future, withdrawing money from a bank would become much more simple. Instead of physically having to visit a cashpoint or bank branch to withdraw cash, customers could do it online. In times of crisis, when people tend to take money out of their accounts so they can have the perceived safety of cash, causing the phenomenon of the bank run.
Full article:
https://news.bitcoin.com/top-banker-warns-cryptocurrencies-could-precipitate-a-financial-crisis/
