In a report released by the European Parliament, they have stated that they do not believe that cryptocurrency has the power to challenge the dominance of central banks.
The most recent Monetary Dialogue report was issued on June 26th and the European Parliaments Committee on Economic and Monetary Affairs said that whilst cryptocurrencies have significantly improved the safety, speed, and transparency of financial transactions, it is unlikely that they pose a threat to fiat currencies.
This analysis was carried out by the Centre for Social and Economic Research, a not-for-profit research institution that is based in Poland. Early on, they noted the positive changes that cryptocurrencies could bring to transactions and also stated that they are used globally with no limitations on borders or geographical constraints.
Real market demand
The report states that cryptocurrencies respond to “real market demand” and that there is every chance they have the potential to become a fully-fledged private money as well as an integral part of the global economy. The report then goes on to state that whilst this is all positive, it remains unlikely that cryptocurrencies will pose a threat to central banks and traditional fiat currencies, especially in countries where sovereign currencies are very popular.
Despite the widespread popularity of fiat currencies, there are a few exceptions. Countries such as Venezuela is a small jurisdiction but the sovereign currency is incredibly volatile. In a case such as this, cryptocurrencies could offer a valid alternative to unstable fiat currencies.