Central Banks around the globe have had hawkish, unfavorable opinions towards digital currencies. Although, the Spanish Central Bank, Banco de Espana (BDE), stands as a striking contrast. The regulator has released a report in which it says that the use of cryptocurrencies, notably when there is a digital version of the state currency will help in making the monetary policy of the nation better. It also said that such currencies could assist in enhancing the current financial structure of the country.
Mr. Galo Nuño, Director General for Economy at BDE stated in a report that the use of digital currencies could have a decisive impact on the economy. The report centers on the fact that the use of crypto coins and the underlying technology, blockchain, could assist in tracking the nations money supply more effectively, as the BDE currently cannot track all currency notes and coins accurately.
The document, although, doesn’t explicitly state the border impact that Spain will experience if the digital currency is adopted. The document touches the subject from the surface and talks about the “potential outcomes and implications” to keep the financial system steady if they are implemented.
The report stipulates that favorable impact could only be encountered with Central Bank issued digital currencies (CBDC). Evidently, the bank isn’t open to letting a set of global developers decide which way the currency swings and how it is changed and developed over the years.
Mr. Galo Nuño has been designated with the task of investigating the “principle motivations for which many central banks are currently examining the potential consequences of introducing such instruments.”
The document further recommends that central banks have to increase the money supply by printing new paper bills frequently. Though, shifting to the blockchain will help in managing interest rates and money supply better. The nine-page report further cautious of the fact that traditional banks don’t fully understand the digital currency sector.
Mr. Luis Maria Linde, the Governor of BDE, stated in May that digital currencies have more risks than benefits.
“Digital currencies have low recognition as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been linked to fraudulent or illegal activities in many cases.”