Spanish Central Bank Banco de Espana Highlights Cryptocurrency Use in New Report
Spanish Central Bank Shows Support To Cryptocurrencies In A New Report.
Different central banks have been attacking virtual currencies, how they work and that they can harm the economy and investors. But this time, the Spanish Central Bank – known as Banco de España (BDE) – is showing support to virtual currencies.
In a report released by the institution, the bank states that digital currencies can help improving monetary policy. Additionally, virtual currencies could also help improving existing financial infrastructure in the country.
The report has been written by Galo Nuño and focuses on the effects cryptocurrencies would have on the economy. Using blockchain technology could help tracking money supply more efficiently. At the moment, it is not possible for the BDE to track all the notes and coins accurately.
An important difference marked by the report is about the use of Central Bank Digital Currencies (CBDC). The analysis is centred in these currencies rather than Bitcoin or any other altcoin.
Galo Nuño explained:
“An argument that could be considered at the time of assessing the introduction of CBDC is related to the improvement in the conduction of monetary policy through a better control in the market returns that savers and borrowers have to face. Also, the possibility of eliminating the restrictions associated with the zero level of the interest rate is theoretically attractive, especially in an environment of low interest rates such as the current one”
At the same time, the governor of the Banco de España, Luis Maria Linde, said that cryptocurrencies have more risks than benefits. He stated that there is a low acceptance as a means of payment, they suffer extreme volatility and have different vulnerabilities.
The report is also trying to understand why other central banks are currently exploring potential effects of these currencies.
As central banks have to increase money supply printing ne paper bulls regularly, using blockchain technology would help manage interest rates and money supply in the economy. Moreover, the report explains that banks do not fully understand how virtual currencies work.
Spain is a very active participant in the cryptocurrency market. We can mention that it has Madrid as one of the most important crypto-related centres in the world. Different political parties in the country have been working in order to reduce taxes for blockchain and crypto related companies.