Mario Draghi, who is the outgoing president of the European Central Bank, recently admitted that crypto assets could have a significant impact on the bank’s monetary policy in the future. He noted in a letter that crypto projects like the Facebook Libra project could one day pose a major challenge to the Euro. The president of the bank sent the letter to a Member of the European Parliament, who has been a long-time advocate of crypto and the blockchain tech that powers it.
What the Letter Says
In the letter, Draghi admits that central banks in Europe have been actively monitoring crypto developments and their effect on the monetary policy of the EU. He noted that crypto assets had thus far had little impact on the ECB’s policies.
One example he gave that could change all this is the Facebook Libra project, which is set to launch in 2020. He said the fact that major tech firms back it, could help to provide it the support needed to ensure mass adoption, which could have a major impact on the existing system of finance.
In his letter, the ECB president said that the potential launch of Libra showed just how outdated the existing monetary system had become. One area he believes could benefit from digitization is cross-border payments. To that end, he proposes that Europe adopts the digital euro while also tearing down and rebuilding the existing system from the bottom up.
His letter does note that efforts are being made to improve the existing system. For instance, he gave the example of the TIIPS service, which launched in November 2018. The service makes real-time transfers between customers and service providers possible. Draghi is set to soon be replaced by Christine Lagarde, former MD of the IMF, who appears to be more receptive to crypto.