On September 7, 2017, the Governing Council of the European Central Bank (ECB) gathered in Frankfurt, Germany, for a monetary policy meeting. In a press conference after the meeting, ECB president Mario Draghi reportedly responded to a question about a proposed Estonian cryptocurrency.
Responding to the inquiry, Draghi said, “No member state can introduce its own currency. The currency of the eurozone is the euro.”
Estonia joined the European Union in 2004, and in January 2011, the former Soviet state became the 17th member of the eurozone. In August 2017, estcoin was proposed by Estonia’s managing director of e-Residency, Kaspar Korjus.
“Several countries have begun experimenting with the introduction of their own digital currencies and China has even developed a prototype cryptocurrency that could one day be put into circulation,” wrote Korjus.
“However, Estonia has a clear advantage in this area due to its advanced digital infrastructure and its e-Residency programme,” Korjus added. “No other country has come close to developing both the technology and the legal frameworks that would enable them to introduce and securely manage tradable crypto assets globally.”
Is this the end of estcoin?
At the ECB press conference, Draghi’s proclamation demonstrated institutional resistance to the creation of national cryptocurrencies. As one would expect, the ECB hopes to retain control over the monetary policy of the eurozone, including its money supply and interest rates. After all, the primary objective of the ECB is to “maintain price stability,” a task that could be significantly complicated by competing national currencies – digital or not.
Although estcoin was proposed to support a “digital nation,” since it originates with a member of the eurozone (Estonia), the cryptocurrency might not be politically tenable. Kaspar Korjus has not yet replied to a request for comment.
Although many defend the euro, various politicians and economists have long declared the death of the currency. Even though Draghi rejected a national cryptocurrency, it’s possible that the ECB would consider something like a blockchain-based euro. Perhaps, a step into FinTech could garner support for the ECB and the eurozone.
In the meantime, it will be intriguing to see if other European countries consider national cryptocurrencies. Already, Colu, a blockchain wallet provider, has developed local virtual currencies tied to the pound sterling. These have gained some traction in East London and Liverpool – though the currency is neither operated nor managed by the British government. While the impetus behind Colu is a local medium of exchange, something on a larger scale could prove economically disruptive. Imagine, for a moment, if the Bank of England sanctioned a blockchain-based pound. Although the United Kingdom was never a member of the eurozone, on the backdrop of Brexit, major financial reform could inspire other nations to leave the European Union for economic self-determination.