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Ewald Nowotny considers Bitcoin as too unstable and vulnerable to speculation

Ewald Nowotny

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Ewald Nowotny, who is member of the Governing Council of the European Central Bank (ECB), has warned against adopting the Bitcoin as the official payment instrument, saying that digital currency is not stable and too vulnerable to speculation. Many governments around the world are considering how to regulate and classify a Bitcoin, whose value rose in June to a record high of just under 3,000 USD.
In April, the Japanese government acknowledged Bitcoin as a legal tender as part of efforts to use financial technology to boost the economy.
“The Bitcoin do not owns the main feature that makes a currency good, namely – stability”, said Ewald Nowotny. “The crypto-currency is subject to speculations”, he adds.
Like other virtual currencies, the Bitcoin is not run by a single body, such as a central bank. Instead, transactions are recorded on thousands of computers around the world that support logs and validate transactions – a technology known as a block chain.
Recently, investors have begun to mitigate their position on technology as a result of its outstanding performance and its potential to compete with gold and sovereign currencies as a valuable asset.
The cost of the battleship dropped by 20% from its June record but still reported a 245% increase for the past year.
“Although the central bank would not ban the Bitcoin, but people need to be aware of the risks”, said also Ewald Nowotny.
The Bitcoin can be traded on stock exchanges in the same way, as shares and bonds. It has become a way of paying some retailers as well as transferring funds without the need of a third party.
The ECB is doing “experimental activity” with the same technology behind the Bitcoin but needs further research before considering it, said earlier Yves Mersch, another member of the ECB executive board.