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European Parliament: CB intends to increase the competition in the crypto market


State cryptocurrencies can decrease the risks in the current crypto market.

On behalf of the Committee of the European Parliament on Economics and Monetary Affairs (ECON), a report appeared on the state of competition in the cryptocurrency market. According to the researchers, the state cryptocurrencies issued by central banks (CBDC), whose development is supported by MasterCard, can revive the competition in this market and stimulate its development in the “right direction”: “the arrival of authorized cryptocurrencies, which are promoted by banks, including central banks, will rebuild the situation with competition in the market, increasing the number of players on it. ” The report expresses the idea that existing cryptocurrencies such as Bitcoin, together with their existence, bring risks for financial stability, and also make the monetary policy implemented by regulators ineffective. This effect, which is negative, is also associated with the emergence of a number of other technologies that also carry risks: artificial intelligence technologies, cloud programming, biometrics, digital verification of the user’s identity, the blockchain, cybersecurity, regulatory technologies, Internet of things and augmented reality.

At the same time, CBDC, according to researchers, can create the necessary “balance” in the cryptocurrency market, which carries risks. It is noted that private cryptocurrencies will not have such an effect since CBDC have an “advantage”: their functioning is based on the fact that there is a third participant between two market participants using such crypto coins – the central bank they trust. The report concludes that CBDC will be needed on the market, so that gradually, if necessary, replace existing traditional money. In addition, the introduction of CBDC into the market is the only way to curb the “destructive potential” that decentralized cryptocurrencies bring, and the application of the regulation of which is unproductive.

The report also suggests that there is competition between the cryptocurrencies that CBDC will return to normal, as well as competition between “service providers” in the market, such as crypto exchanges and digital currencies. Researchers see the risk that in the second case a “cartel collusion” is possible, which may be aimed at preventing the distribution of that or crypto coins in the market, and they see the risk that such collusion may hamper the development of the CBDC.

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