According to the European Parliament and its statement last week, cryptocurrencies are not ready to challenge the economic power of central banks.
In the latest report of the Monetary Dialogue edition issued on June 26th, the European Parliament’s Committee on Economic and Monetary Affairs said that while cryptocurrencies are definitely making the financial transactions “safe, transparent and fast” – they pose no threat to sovereign currencies around the world.
The analysis was conducted by the Center for Social and Economic Research which is a non-profit research institute based in Warsaw. The Center first recognized the positive changes that cryptocurrencies have brought to financial transactions, noting that they are “now used globally, disregarding national borders.”
As per the analysis, cryptocurrencies “respond to real market demand” and they will have the potential to become “full-fledged private money” or even a permanent element to the global economy.
Still, the researchers cited that it is “unlikely” for cryptocurrencies will threaten central banks and sovereign currencies as well as dismantle the existing monetary structures which are especially in countries where their sovereign currencies are widely circulated.
Still, there are a few exceptions exist. According to the report, there is runaway inflation in Venezuela (which we covered in a different article) and in cases like these, cryptocurrencies “may” offer an alternative to unstable currencies, according to the Parliament’s Committee.
In addition, the analysis also suggested that financial regulators should treat cryptocurrencies as “any other financial transactions or instruments” given the risk associated with transactions using cryptocurrencies (such as money laundering, tax evasion and financing illicit activities).
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