European officials: Virtual currencies are no way to pay

The lights of the skyline of the Frankfurt banking district are reflected in the river main after the sun set

European finance officials are underlining their skepticism toward digital currencies like bitcoin, saying they are risky for investors and inefficient as a way to pay for things.

A top monetary official, Jens Weidmann, said in a speech yesterday that digital currencies such as bitcoin are not good means of payment because their values fluctuate so rapidly. He added they were no substitute for conventional currencies backed by central banks such as the European Central Bank.

Weidmann is head of Germany’s national central bank and also sits on the governing council of the European Central Bank, issuer of the shared euro currency.

He said that “for a stable monetary and financial system we need no crypto-tokens, but rather central banks obligated to price stability and effective banking regulation, and we have both in the eurozone.”

He said that central banks did not need to issue such currencies themselves, which he said could heighten the risk of bank runs.

Weidmann’s remarks follow a series of statements from top European officials warning banks and consumers about virtual currencies. The three European supervisory authorities for banking, securities, insurance and pensions have warned consumers of the risks of buying such currencies, saying they are “highly risky and unregulated products and unsuitable as investment, savings or retirement products.” AP