Cryptocurrency market update: There is a lack of a business case for CBDC – ECB’s Mersch

Speaking at the Consensus 2020 virtual conference on May 11, the member of the Executive Board of the ECB, Yves Mersch, shared the view of the European regulator on the concept of central bank-issued digital currency (CBDC).

According to the top ECB official, the central bank is engaged in the research on virtual currencies just as the overwhelming majority of other central banks. He admitted that financial innovation has disruptive potential and may change the way payments are processed. However, at this stage, the discussion abounds CBDC is more theoretical than practical, as there is no clear business case for this type of money. 

The ECB’s debate on CBDCs is therefore mainly analytical. Whether and when it becomes more of a policy debate will largely depend on the preferences of households.

Apart from that, Yves Mersch emphasized that the regulator wants to be ready to implement innovative solutions once the need arises. That is why at this stage they are looking for options to access the impact of CBDC on the financial system and the Central Bank’s powers.

 We are always willing to innovate in the form of money and payment services that we provide. If, for instance, people voiced a preference tomorrow for plastic or polymer banknotes rather than the traditional paper ones, we would happily accommodate them. In the same vein, we closely follow technological developments and reflect on the type of money and payments that are best suited to the needs of an increasingly digital economy.

Top-3 cryptocurrencies price updates

Bitcoin (BTC) is back on the recovery track. After hitting the low of $8,100, the first digital asset managed to claw back some ground to trade at $8,950 at the time of writing. A sustainable move above the thick layer of stops clustered around $9,000 will improve the technical picture and attract more short-term buyers on the market. The next resistance comes at $9,500. The volatility remains high as we are several hours away from the halving. 

Ethereum made is way above $190.00 amid strong recovery on the cryptocurrency market and retreated to $188 by press-time. The second-largest digital asset hit the intraday high at $193.87; however, the con continues moving with the strong upside momentum. The next resistance is created by $195.00.

XRP/USD is changing hands at $0.1983. The coin does not participate in the rally led by Bitcoin as it is mostly unchanged both on a day-to-day basis and since the beginning of the day. The recovery is still capped by a psychological $0.2000.