Digital currencies do not qualify as currency and their usage as a means of payment is negligible, an executive board member of the European Central Bank said recently.

Speaking at the Joint ECB and Banca d’Italia conference in Rome on 30 November 2017, Yves Mersch said that digital currencies, by definition, do not formally qualify as currency. He noted that while there has been a substantial increase in the value of some of the digital currencies recently, their usage as a settlement asset and means of payment is very limited.

Mersch added:

“In fact, retail payment traffic in Europe alone is orders of magnitude higher than the global transaction volume of virtual currencies. In view of the speculative market environment for virtual currencies and for other types of virtual financial assets, one should bear in mind that these are by definition virtual: they do not constitute a claim on an issuer and do not formally qualify as currency.”

He said that the ECB is closely monitoring this space, both from a market infrastructure perspective and for monetary policy, financial stability, and prudential supervision. Mersch also revealed the central bank’s intention to experiment with cash on different digital technologies.

In his concluding remarks, Mersch urged banks to implement instant payments as soon as possible and “provide an alternate narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.”