After years of criticizing cryptocurrencies, the European Central Bank (ECB) has recognized that Bitcoin is a store of value. Going further, the study also states that Bitcoin may be better than some sovereign currencies, especially in countries hit by inflation.
The document was signed by Paola di Casola, senior economist at the ECB, and Maurizio Michael Habib, also an economist at the ECB, and can be read in full on the European Central Bank’s website.
One of the points examined was P2P trading, that is, outside decentralized brokers. By showing different fiat currencies, the ECB makes it clear that interest in Bitcoin is international.
The European Central Bank says cryptocurrencies are a better store of value than national currencies
While cryptocurrencies fell sharply at the end of last year, one of the most important members of the European Central Bank (ECB) even suggested that Bitcoin should be banned. More recently, the ECB president stated that her son lost almost all the money he invested in cryptocurrencies.
However, a new study published by the ECB itself shows that Bitcoin and other cryptocurrencies are not so bad after all. Despite citing the famed volatility of these assets, he noted that cryptocurrencies can be used as a store of value.
“Although prices have been highly volatile, these cryptocurrencies may represent a better store of value compared to the national currencies of countries where inflation is high and the exchange rate tends to depreciate.”
Moving on, the study continues to suggest that Bitcoin has an even greater impact in developing countries, generally with weak currencies, and that this could be visible after the global pandemic.
“The devaluation of the national currencies of emerging countries leads to more Bitcoin trading”the ECB points out. “This suggests that despite large price fluctuations, Bitcoin may also have been used as a store of value or medium of exchange in countries that have experienced a loss of purchasing power of their national currency.”
“This in turn implies that macroeconomic instability could potentially encourage greater use of crypto assets.”
The document quotes the words “store of value” 13 times across the 56 pages, always with an optimistic tone about Bitcoin and repeating almost the same sentence, as seen below.
“This finding suggests that Bitcoin could be used as a store of value or medium of exchange in countries experiencing a loss of purchasing power of their national currency.”
Although people do not have to rely on any government action to carry out this exchange, Argentina is one of the countries that could adopt Bitcoin soon. Javier Milei, the recently elected president, will take command of a country with one of the highest inflation rates in the world. Moving on, he is also a big fan of Bitcoin.
El Salvador, a country that does not have its own currency and uses the US dollar, has also adopted Bitcoin as legal tender. Last week, President Nayib Bukele celebrated the fact that Bitcoin investment turned positive after two years of decline.
Finally, the most optimistic people believe that central banks in several countries will soon start purchasing Bitcoin as a store of value. Apparently the European Central Bank could be one of them.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
