The report is mainly used to explain stablecoins and how safe they actually are.
I will pick out the key points on the document but it is mostly in relation to the mechanisms of stablecoins. It’s clear that the ECB feels that stablecoins need more investigation and regulation.
More recently, financial service providers and technology companies have been working towards the development of stablecoins for payment transactions on a global scale. For example, Facebook initiated project Libra with the main aim of enhancing financial access for underserved populations and providing faster and more efficient retail payments across borders.
The issue here seems to be the fact that companies are about to look into cross-boarder transfer technology without using traditional methods.
There is currently no universally agreed definition of what constitutes a crypto-asset but the ECB has defined it for its own analytical purposes as “a new type of asset recorded in digital form and enabled by the use of cryptography that does not represent a financial claim on, or a liability of, any identifiable entity.” The specific risk profile and the high volatility of crypto-assets derives from the absence of a concrete claim against an issuer
It seems that the ECB are looking into classifying cryptocurrencies.
The demand for a stable asset recorded in distributed ledgers, in particular for the settlement of payments, has sparked a wider discussion around the possibility of central banks providing a digital form of their currency to the public, as they do with physical cash.9 In fact, most central banks around the globe are currently conducting analysis into Central Bank Digital Currencies (CBDC)
There you have it straight from the horse’s mouth. the ECB and other central banks are looking to create their own cryptocurrencies, although we know about the PBoC. Other thank regulation there are also issues with taxation and tracking. The rest of the paper focuses on how the distributed ledger technology works and how it could be useful, again if you would like a full read click here.
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