Digital currencies issued by central banks could provide a reliable alternative to the fractional reserve banking system, according to a report prepared for the European Parliament's Economic and Monetary Affairs Committee. The report, which was published on Tuesday, said that digital currencies, such as bitcoin, are "increasingly being used in cross-border payments and other financial transactions. The report contradicts guidance from the Bank for International Settlements, which warns of the "potentially serious implications for monetary policy" from central bank-developed digital currencies.
Digital currencies issued by central banks could provide a reliable alternative to the fractional reserve banking system, according to a report prepared for the European Parliament's Economic and Monetary Affairs Committee. It said the current system can be a "major source of instability", and that creating a reliable funding source could "pave the way for a more stable financial system". The report contradicts guidance from the Bank for International Settlements, which warns of the "potentially serious implications for monetary policy" from central bank-developed digital currencies.