European Central Bank Acknowledges Crypto Assets’ Legitimate Value Story in Latest Report
The European Central Bank (ECB) asserts that Bitcoin (BTC) and other digital assets are serving as a store of value for individuals globally. Particularly in emerging and developing economies (EMDEs).
The ECB’s report identifies three key drivers for the growing adoption of cryptocurrencies in these regions. Firstly, digital assets serve as speculative assets, appealing to investors facing restrictions on investment choices. Secondly, despite their volatility, cryptocurrencies may offer a more stable store of value in nations with high inflation and depreciating exchange rates. Thirdly, residents in EMDEs may utilize cryptocurrencies for cross-border transactions. Bypassing capital controls and reducing remittance costs.
The ECB also notes that the accelerated debasement of fiat currencies, especially in EMDEs following the Covid-19 pandemic, has stimulated increased crypto trading. This depreciation, not observed in advanced economies, suggests that Bitcoin is perceived as a store of value or medium of exchange in countries experiencing a decline in the purchasing power of their domestic currency, indicating that macroeconomic instability may drive greater cryptoasset usage.
Clever Robot News Desk 7th December 2023
