ECB Wages A War Against Bitcoin

To date, central banks and governments have been largely ignoring Bitcoin. This looks like it has now changed, as the European Central Bank (ECB) has given an official warning against this virtual currency. This comes only a day after a key commentator has predicted that the flawed currency is on its last legs.

The first time the ECB officially warned about the dangers of virtual currencies in general, and in particular, bitcoin – what was then a mostly unknown currency trading in the single digits (in USD terms) – was in November 2012 when in a report called “Virtual Currency Schemes” it warned that “in an extreme case, virtual currencies could have a substitution effect on central bank money if they become widely accepted. The increase in the use of virtual money might lead to a decrease in the use of “real” money, thereby also reducing the cash needed to conduct the transactions generated by nominal income. In this regard, a widespread substitution of central bank money by privately issued virtual currency could significantly reduce the size of central banks’ balance sheets, and thus also their ability to influence the short-term interest rates. Central banks would need to look at their existing tools to deal with this risk (for instance, trying to impose minimum reserve requirements on virtual currency schemes).”

Ironically, since then the ECB has moved significantly down the narrative of currency substitution, and in fact, following a recent push to eliminate paper currency (now that the €500 bill is no longer produced) the central bank has been urging for a shift away from real, paper money and into electronic variants.

However, overnight in a surprising reminder how the European central bank feels about bitcoin and other virtual money, the ECB urged EU lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone. – Zerohedge

Central banks are desperate as they have run out of most options when it comes to try and revamp failing economies. People are starting to reject their currencies and policies and turning to alternatives like virtual currencies. This collapse in confidence has been going on for nearly a decade now.

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Those world governing powers are trying to take back their power by rejecting these alternatives and publicly speaking out against them, rather than just ignoring them. People want to protect their money in times of uncertainty and see precious metals and virtual currencies as the way of achieving this.