ECB Dismisses Bitcoin as Cross-Border Payment Medium
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The European Central Bank is trying to find the best tool for cross-border payments.
The European Central Bank, one of the world’s most important central banks, looking for the best cross-border payment method.
By study Posted by the European Central Bank (ECB) “Towards the holy grail of cross-border payments“, the institution states that the best payment method for this purpose is central bank digital currency (CBDC).
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The central bank has also looked at various stablecoins, Bitcoinand other options for cross-border payments.
The study “Towards the Holy Grail of Cross-Border Payments” states this Cross-border payments are needed as a way to get an immediate, cheap, universally accessible and secure means of payment.
As for Bitcoin, it is considered the “most prominent unsecured crypto-asset”. cannot serve as a good cross-border payment method due to its highly variable nature.
The study states:
Since settlement on the Bitcoin network only happens every ten minutes or so, the valuation effects are already realized at the time of settlement, which actually makes Bitcoin payments more complicated.
Concluding the Bitcoin section, the study also highlights that this cryptocurrency cannot be a cross-border payment due to its “underlying technology (and in particular its ‘proof-of-work’ layer)” which is considered to be too expensive and pointless. In addition, the study states that considering the disadvantages of Bitcoin matters related to administration and price volatility.
According to the study, CBDC is a better choice for cross-border payments because of that monetary policy autonomy and the ability to make immediate payments through central banks.
Although the European Central Bank rejects Bitcoin as a means of cross-border payment, other institutions welcome this cryptocurrency with open arms. Just recently in Santa Lucia, Honduras launched Bitcoin as a means of payment in local businesses. 27 July also Gibraltar allowable tourists and locals can pay with Bitcoin for their goods and services.