Bitcoin Is A Major Difficulty For World’s Central Bankers

[kori]

Bitcoin Is A Major Difficulty For World’s Central Bankers

They are faced with the questions: should they ban it, regulate it, embrace it, or ignore it?

One keen observer says, “Their best bet would be to let Darwinism take its course, and resist the regulatory impulse to interfere with either its survival or ‘death’ and, if it lives, step aside and celebrate innovation not move block its progress.

Bitcoin poses a challenge to central bankers’ exclusive power to print money, no one yet know how they will respond to it.

Reports the European Central Bank (ECB) and the Bank of England (BOE) suggest they are working  keep all options open.

The ECB’s listed central bank views on what Bitcoin is or is not.

Sweden and Finland deny it is a currency. Finland disqualified it as a manner of payment, Sweden taxes it as an asset.

Germany regards it as a unit of account, like the International Monetary Fund’s Special Drawing Rights (SDRs), not legal tender but a form of financial instrument.

The US Fed regards the technology as not “sufficiently mature,” in need of  “further exploration and monitoring”, and that it does not  have the right to regulate digital money.

The ECB’s notes that there are as many as 500 different virtual currency platforms, mostly variations of Bitcoin’s open-source system.

The bank does not say that anyone is using anything other than Bitcoin to make payments. Bitcoin  is a tiny fad in the world of finance. The ECB contrasts the 69,000 daily Bitcoin transactions globally with the 274-M non-cash payment transfers each day just in the EU. It also highlights that in both number and volume of transactions.

Bitcoin is tiny compared to  regular payment systems

The ECB notes that digital currencies currently have fundamental flaws, including the lack of refund rights if your account makes payments not authorized, whether by fraud or accident, plus the existence of what it calls “Scamcoins” designed to fraud participants.

Why users like Bitcoin; cheaper transaction costs, no geographical borders, faster settlement and the anonymity of the system all offer advantages over traditional methods of the money business.

A BOE report follows the central bank orthodoxy of denying that digital currencies can count as money because of their minuscule role in the buying and selling of things.

Their data indicate that digital currencies are primarily viewed as stores of value, and are not usually used as mode of exchange.

It is argued that money is distinct from a long-term asset.

The argument is that people do not  expect the value of money to increase in value over time, and part of the definition of what constitutes money Vs an investment is that money is a medium of exchange. People buy things with money, not with investments.

The conclusion of the BOE’s report is that it may consider introducing its own version of Bitcoin. Saying that the technology involved “may have significant promise.” “A central bank-issued digital currency might be a more easily controlled means of settlement and exchange,” said a senior research adviser at the central bank.

Based on the position of the BOE it is clear the central banks would prefer virtual currencies to fade away on their own. If that does not happen they will move to position Bitcoin and the other digital platforms into existing oversight frameworks, and the apply rules, codification and administration.

Dampening digital currencies in officialdom would then deny their Key attraction to advocates and users, so then with the government blankets, Bitcoin becomes a not issue.

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[thejaytiesto]

I assume this from a news site. You should link to the site beyond copy and pasting the entire article IMO.

[Possum577]

It's interesting that the ECB sees the lack of refund rights as a "flaw" rather than just a con or difference from traditional banking system. While the lack of refund rights is a risk it certainly eliminates some elements of fraud in the existing transaction system.

[PaulPierce]

Could you please post the source rather than just copy pasting if it is an article?
Thanks.

[solitude]

[MilesJohan]

Here is the article he has quoted it from http://www.livetradingnews.com/bitcoin-major-difficulty-worlds-central-bankers-98135.htm

[virtapayseller666]

its an article on news which you have copy from other websites copy from livetradingnews website

you posted in wrong section it must be in press section of the bitcoin discussion thread

[Q7]

Whether they want to embrace and be part of it certainly remains a big question. But secretly I think more likely they would see bitcoin as a threat to the existing banking system. Banks can't manipulate bitcoin, that's a fact. Banks don't own them, the people does. It is an alternative. What if one day everybody decides to use and trust bitcoin more than the fiat they are holding? If that's the definition of "major difficulty"

[countryfree]

A Major Difficulty

No, they are bigger issues, right now. Much bigger.

[polynesia]

They will certainly be aware of it.
If Bitcoin becomes successful, certain tools that they have at their disposal (raising interest rates, QE, etc) might not be that successful. So they might have to take a calibrated approach.

[ajareselde]

"should they ban it, regulate it, embrace it, or ignore it"

-Well they can ban it but it wouldnt kill it and we all know it would end just like any other banned thing, it would find a way to trade, and there would be a lot of pressure on them.
-They can ignore it, but it will get their attention and their fear sooner or later.
-They can regulate it, but every regulation is allways considered as sign of approoval, bouncing it up again in terms of price, and news coverage

So the only long term option is to embrace it, and accept that theres something they cant control the way they controlled everything else.
If they embrace, i believe that the market will become so volatile and manipulated, that they will manage to slowly hoard large precentage of the coins to themselves,
and its the most scary scenario, especialy if your hands are weak when trading/holding.

cheers

[doggieTattoo]

Honestly, I think this si a question that a lot of banks are going to have to answer.  Do they want to use crypto currency or leave it as an internet thing.  We have seen what it is capable of, but it still hasn't garnered enough trust for the old asshats up to to consider it.

[deisik]

A BOE report follows the central bank orthodoxy of denying that digital currencies can count as money because of their minuscule role in the buying and selling of things.

Their data indicate that digital currencies are primarily viewed as stores of value, and are not usually used as mode of exchange.

It is argued that money is distinct from a long-term asset.

Central banks apparently usurped the right to define what is money and what is not. It may look as natural, but in fact this has been so only for the last 2-3 centuries. In other times, governments and rulers only passively accepted what people thought of and used as money (gold, silver)... 

[Exther2]

It's going to be a long fight as banks want control over bitcoin, which is unacceptable.

[Erdogan]

Most of them think it is a payment system, which is only an accidental side effect. The main thing about bitcoin is that it is money, with good qualities. That is the real danger for central banks.

Anyway, it seems there will be a fiat money system reset soon, and bitcoin is not yet ready to take over.

[deisik]

Most of them think it is a payment system, which is only an accidental side effect. The main thing about bitcoin is that it is money, with good qualities. That is the real danger for central banks.

Anyway, it seems there will be a fiat money system reset soon, and bitcoin is not yet ready to take over.

This is not accidental, and still less a side effect. Without it bitcoin as a concept wouldn't be possible. For paper money (or gold) the payment system is already here since we can pass coins and notes from hand to hand. That's why we neither care about nor notice the importance of the payment system as such. But with digitized money we already need banks and networks, and things become complicated...

[Undermood]

plus the existence of what it calls “Scamcoins” designed to fraud participants

Yes, there are a lot of shitcoins which are coming out every day and have a bad impact on the image of Bitcoin. But we should keep in mind that Bitcoin is the leading cryptocurrecny, not the shitcoins, which is completely using different block chains.

[no141]

With banks and a central banking system, you can always have an inflating money supply that makes the central bankers money. How can they make money with bitcoin? If they can't they don't like it.

Mining consortiums will be the new banks. When will fiat banks die?