The main European financial regulator compared the digital currencies of the Central Bank with bitcoin, saying that the calculations in the latter are too complicated and costly.
The European Central Bank (ECB) has published the results of its latest study, according to which a central bank digital currency (CBDC) should be much more efficient in cross-border payments than banking service providers, bitcoin and any digital stablecoins. The study is titled Towards the Holy Grail of Cross-border Payments.
Of all digital assets, the ECB singles out BTC as one of the worst candidates for a currency for cross-border payments, due to the volatility of the first cryptocurrency:
“Because settlements on the Bitcoin network occur approximately every ten minutes, the final amount is already added up at the time of settlement. And this greatly complicates payments in bitcoins, requiring more preparation from the settlement participant.”
The researchers did not take into account the latest updates to the Taproot and Lightning Network, which improved the performance of the blockchain. Instead, the ECB said the underlying Proof-of-Work (PoW) technology that powers the network is expensive and environmentally wasteful.
The Central Bank’s digital currency is more suitable for cross-border payments, the central bank says, as it has greater compatibility with conversion in the foreign exchange market. Officials highlight two main benefits of CBDCs: the preservation of monetary sovereignty and the ease of instant payments through intermediaries such as central banks.
Earlier, the ECB stated the need to limit access to CBDC to protect the European financial system.
