Bundesbank head warns digital currencies will make next economic collapse worse

The next global financial crisis is inevitable and perhaps even imminent. With debt levels reaching all-time highs, bubbles ballooning in many sectors and central banks shooting their remaining bullets, an economic collapse will unfold.

And, no, it won’t just be Donald Trump’s fault.

But what will make the next financial crisis interesting, or even worse, are digital currencies.

Jens Weidmann, German economist, president of the Deutsche Bundesbank and Chairman of the Board of the Bank for International Settlements, warns that virtual currencies, like bitcoin, ethereum and dogecoin, will play a big part in amplifying the upcoming economic calamity.

Speaking in Frankfurt on Wednesday, according to the Financial Times, Weidmann explained that the start of an official digital currency by a central bank would establish confidence among the general public that their money was safe and sound. At the same time, Weidmann believes, it could also produce great difficulty for private financial institutions to weather the bank-run and financial-panic storm.

“Allowing the public to hold claims on the central bank might make their liquid assets safer, because a central bank cannot become insolvent,” he said. “This is an feature which will become relevant especially in times of crisis – when there will be a strong incentive for money holders to switch bank deposits into the official digital currency simply at the push of a button. But what might be a boon for savers in search of safety might be a bane for banks, as this makes a bank run potentially even easier.”

Weidmann averred that digital currencies can produce conditions whereby banks can’t make loans and will face a liquidity crisis.

“My personal take on this is that central banks should strive to make existing payment systems more efficient and still faster than they already are – instant payment is the buzzword here,” Weidmann stated. “I am pretty confident that this will reduce most citizens’ interest in digital currencies.”

With virtual currencies surging, this industry should be fun to watch when the economic collapse commences. Will consumers dive into the world of bitcoin like they would with bullion? Time will tell.

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Comments

  1. JRATT1956 says:

    Like the Federal Reserve Notes we all carry around are safe and sound??? This guy is just full of it, he is part of the problem and is just looking for something else to blame when the collapse happens. Trillions of dollars in debt and unfunded liabilities world wide and these banksters never thought their Ponzi scheme will implode. The real reason he does not like digital currency is he cannot control it. I for one will be out of debt in August 2018 and will then go 100% cash, except for the few times I order something on line and then I will pay the balance off in full each month.

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