While American central bankers are still just monitoring the risks bitcoin poses to the established banking system, their counterparts across the Atlantic are already preparing to compete with the popular cryptocurrency. A member of the European Central Bank (ECB) executive board has called on commercial banks to implement new solutions that, in his view, will curb the rapid growth of bitcoin among everyday users.
“Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes,” ECB director Yves Mersch told bankers at a meeting in Rome.
This supposed alternative to bitcoin might be part of a two-pronged attack on the cryptocurrency by the ECB which is known to be looking into “legal restraints” against its users in the areas under the jurisdiction of the central bank.
This year’s explosive price rally and mainstream financial adoption of bitcoin are seen by supporters as a direct challenge to central banks. Beyond the possible monetary effects in the future, the success of bitcoin signals people’s discontent with the handling of their money supply by the Fed, ECB and their equivalent institutions around the world.