Digital currencies

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Concerns about the negative effects of digital currencies were echoed again with the warnings of Bundesbank chief Wens Wideman, one of the most influential European policymakers, who warned that digital currencies have the potential to make future financial crises more devastating.

Digital currencies

Widman, known as one of the ECB’s most reluctant members of the Euro-Zone quantitative easing policy in Frankfurt, believes that European central banks will eventually create their own digital currency to reassure ordinary citizens that these currencies are safe and stable. The process of withdrawing people’s money from banks during future economic crises.

“Permitting the public to demand central banks makes their liquid assets safer, because the central bank can not become insolvent, but this is becoming increasingly important, particularly in times of crisis, because it will encourage funders to convert their bank deposits into official digital currency,” Widman said. Through a push of a button on their smartphones, but what may seem a blessing to savers looking for the safety of their savings may be a curse for banks, because it will make the collapse of banks easier.

The situation of “panic to the banks” when a large number of customers lose confidence in the stability of the bank and the safety of their funds, a large number of customers withdraw their deposits from the financial institution at the same time, either cash or converted into government bonds or precious metals or converted to a financial institution more Our mother, believing that this institution, has gone bankrupt or is subject to bankruptcy. This in turn makes banks’ problems worse because they will lose liquidity, making it difficult for them to meet their obligations.

Talking about digital currencies has been on the rise in recent months, with the price of a single bacon rising from $ 750 in December 2016 to about $ 3,000 now, a 400% growth in just six months, which led to a rise in the price of other digital currencies like Ether.

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