The European Central Bank (ECB) is urging European Union (EU) institutions to discourage the use of digital currencies, such as bitcoin, by highlighting the fact that they do not have the same legal status as currency or money.
According to a legal opinion released on Tuesday, the ECB is urging EU legislators to impose new rules on virtual currencies similar to bitcoin. The reason for this is because they fear that it may actually weaken its own control over the eurozone money supply.
“The reliance of economic actors on virtual currency units, if substantially increased in the future, could in principle affect the central banks’ control over the supply of money … although under current practice this risk is limited,” the ECB said in the opinion for the European Parliament and Council.
“Thus (EU legislative bodies) should not seek in this particular context to promote a wider use of virtual currencies.”
Recently, the European Commission drafted new rules that would mandate digital currency exchange platforms to ramp up checks on the identities of its users and to report surreptitious transactions.
However, the ECB does not believe that the Commission’s proposal goes far enough. The central bank notes that the draft does not cover the use of virtual money to buy goods and services.
“Such transactions would not be covered by any of the control measures provided for in the proposal and could provide a means of financing illegal activities,” the ECB said in a report.
It looks like the ECB is trying to reverse the latest trend of governments, central banks and local authorities maintaining a favorable opinion of bitcoin and other digital currencies (they are likely starting to support cryptocurrencies because they realize they can better monitor and track the population).
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