ECB: Cryptocurrencies Are A Store Of Value
A European Central Bank (ECB) working paper has revealed that Bitcoin and other cryptocurrencies are being used as a store of value globally. The paper, which came a year after the ECB dissed Bitcoin, suggests that cryptocurrencies may be a better store of value in countries with high inflation and depreciating exchange rates. The paper also warns that macroeconomic instability may spur greater crypto asset usage in countries that experienced a loss in their domestic currency purchasing power.
Cryptocurrencies’ ability to protect against unstable domestic currencies is a major catalyst for adoption in emerging and developing economies (EMDEs). Digital assets provide EMDE residents with an alternative payment method for cross-border transactions, circumventing capital controls and lowering the cost of receiving remittances from abroad. However, the high volatility of Bitcoin may discourage people from using it as a payment method.
(With inputs from Shikha Singh)
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