Crytpos Bring More Harm Than Good, Spanish Bank Governor Says
Using cryptocurrencies will incur more risks than benefits, according to the head of Spain’s central bank.
Banco de España’s Luis Maria Linde warned financial institutions that cryptocurrencies at their current state will do the financial world more harm than good. The coins, according to him, are just novelties that will not significantly improve one’s way of life.
Linde, governor of the Banco de España, said:
“[Las criptomonedas] tienen una baja aceptación como medio de pago, sufren una volatilidad extrema [y] presentan múltiples vulnerabilidades operativas y han sido relacionados con actividades fraudulentas o ilícitas en muchos casos ([Cryptocurrencies] have low acceptance as a means of payment, suffer extreme volatility, [and] present multiple operational vulnerabilities).”
Cryptos in Spain are not considered as legal tender. The bank governor added that cryptocurrencies have been involved in different fraudulent and illegal activities. Spain’s Ministry of Finance and Civil Service, in a bulletin released March this year, even warned the Spanish citizens about possible fraudulent schemes that involve crypto.
While Linde remained skeptical about digital currencies, he thought that blockchain technology has the potential to make transactions more efficient and less costly. But at the same time, he advised institutions to be cautious as the nascent technology is still not yet mature.
“El paso a una economía más digital viene acompañado de mayores amenazas cibernéticas y es necesario desarrollar nuevas medidas de protección de los procesos, de los activos y de los datos de los clients (The step towards a more digital economy is accompanied by major cyber threats, and it is necessary to develop new methods to protect the processes, the assets an client data).”
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‘El Cadena de Bloques’
The Spanish financial community already got a glimpse of what benefits blockchain technology could bring. In April 2018, Spanish lender Banco Bilbao Vizcaya Argentaria (BBVA) issued a loan using the distributed ledger technology, becoming the first global bank to do so. The loan, worth EU€75 million, was processed exclusively using blockchain technology with the contract registered on the Ethereum network.
The BBVA, second-largest bank in Spain, reported that the process was cut down from days to hours. The bank hailed this breakthrough as a significant step toward utilizing blockchain technology, not just in banking transactions but also in other public and private interactions.
Carlos Torres Villa, BBVA chief executive, has said about blockchains:
“[El blockchain] tiene un potencial grande de transformer la industria de servicios financieros ([The blockchain] has a great potential to transform the financial service industry).”
European Blockchain Effort
Meanwhile, European countries have signed last February 2018 a declaration on the establishment of a European Blockchain Partnership. Spain, together with other 22 countries, saw the potential of blockchain to provide an easier life to its citizens. The declaration also recognized Europe as the leader in blockchain technology development.
The document stated:
“Blockchain-based services have the potential to enable more decentralized, trusted, user-centric digital services, and stimulate new business models benefiting our society and the economy. Such services will create opportunities to enhance services in both public and private sectors.”
The signatories were mandated to share with other countries experiences and other information related to the implementations of blockchain applications. By doing so, future apps and projects will be compatible across all European countries.