Bitcoin is not Currency, Says ECB’s Ewald Nowotny


Bitcoin has been on the mind of central bankers around the world and the talks of regulation have been multiplying. The European Central Bank (ECB) has already revealed its desire to regulate the virtual currency in Europe.


One of the members of the board of governors of the European Central Bank, the Austrian Ewald Nowotny, has come out in favor of a regulation of bitcoin, a “purely speculative object that pretends to be a currency,” he said Wednesday in an interview.

“It would be enough to apply the basic rule of any financial transaction: participants must disclose their identity. That would break bitcoin,” said Ewald Nowotny in an interview with German newspaper Süddeutsche Zeitung.

“We need a VAT on bitcoin, which is not a currency,” he also outlined. Mr. Nowotny is therefore following in the footsteps of the ECB, which considers bitcoin a bubble rather than as a potential competitor of the euro, while pointing out the risks of money laundering posed by the development of blockchains and cryptocurrencies.

“We have just decided not to print 500 euro banknotes for this reason and we are seeing a huge recycling of this dirty money in bitcoin,” he laments.

Bitcoin, the virtual currency that burst onto the international financial scene in 2017, has risen from around $1,000 in January to over $ 16,000 in mid-December, a dizzying ascent of what experts call a bubble, even in financial circles accustomed to speculation and volatility.

Moreover, the president of the Austrian central bank believes that bitcoin is primarily a fashion and highlights the impossibility in the long run to generalize payments with a currency whose price is so volatile. “When I take the metro on weekends with my grandchildren, there are always some people who come to talk to me about it, before they used to question me on whether to buy gold,” said ironically Mr. Nowotny.

The ECB is not the only government institution that has pressed the alarm button over the volatility and use of bitcoin. Officials from the US Federal Reserve (Fed) have also recently raised concerns over the issue. The Israeli Securities Regulatory Commission also announced in December that it wants to ban the trade of Bitcoin and other cryptocurrencies in Israel as long as transactions involving these currencies are unregulated. South Korea also in December announced that it was banning its financial institutions from using virtual currencies such as bitcoin. The central bank of Singapore on its side has recommended investors to act with “extreme caution” vis-à-vis bitcoin.

Shakes Gilles

Editor of The Talking Democrat. He enjoys bike riding, kayaking and playing soccer. On a slow weekend, you'll find him with a book by the lake.