Digital Cash

Germany's central bank advises against Bitcoin

FILE PHOTO: An illustration photo shows a Bitcoin (virtual currency) paper wallet with QR codes and a coin
A so-called Bitcoin paper wallet with a QR code and coins. Source: Reuters/Benoit Tessier

Bitcoin might be recognized as a legal form of payment in Japan, but it appears the same will never happen in cold hard cash-loving Germany — at least not anytime soon.

The Bundesbank has warned against investing in the virtual currency, which is enjoying a record high following the legalization of the currency in the East Asian country on April 1.

“Bitcoin is a means of exchange which is not issued by a central bank, but by unidentified actors. I do not see it as a currency,” Carl-Ludwig Thiele, a board member of the German central bank, told the newspaper Welt am Sonntag. “If you think Bitcoin would be as safe as the euro or the dollar, you have to take responsibility for it. We can only warn people not to use the bitcoin to preserve purchasing power.”

The trading price of bitcoin swelled to an all-time high above $1,400 last week and has not stopped climbing, more than tripling in value over the last year. In Europe, the digital currency was valued at over €1,595 , or $1,700, on Tuesday on the Luxembourg-based Bitstamp exchange. In the last 30 days, bitcoin has risen over 30 percent.

One investor told American broadcaster CNBC that the price could spike even higher to up to $4,000 over the next 14 months.

In China, authorities have added credibility to the virtual currency by charging trading fees on bitcoin exchanges, concerned about speculation and its potential use for money laundering.

Mr. Thiele voiced similar concerns about bitcoin as a “speculative object” but said he did not see a need for banning it as a method of payment, so long as it did not violate money laundering laws, since it still only represents a niche market.

“Seventy-seven million bank transfers, direct debits and card payments are processed daily in Germany,” he told the newspaper, compared to only 35,000 bitcoin transactions.

 

Barbara Woolsey writes for Handelsblatt Global in Berlin. To contact the author: b.woolsey@extern.vhb.de

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