Economic Report Dutch version
A consortium led by Facebook recently announced the introduction of a new cryptocurrency, the Libra. Unlike most other cryptocurrencies, the Libra will be fully covered by financial assets. If the Libra actually gets off the ground, it potentially also has a greater impact on the financial system than other cryptos.
The ECB could use Central Bank Securities to mop up liquidity. The use of this instrument may bring the additional advantage of the creation of a EMU-wide ‘safe asset’. This may bring advantages for the stability of the Eurozone.
EMU is vulnerable and must be strengthened. Much is possible within the current legal framework. Banking Union (incl. EDIS) must be completed and it is essential to create a pan-EMU safe asset. Moreover, the ECB needs more effective instruments.
Special Dutch version
The US dollar has been the global anchor currency since 1944. This gives the US certain advantages, but it also brings negative consequences for international stability. The global economy needs a new anchor, independent from an individual country.
The German economy is gradually losing momentum. Car sales are recovering, but damage of the third quarter of 2018 has not been repaired yet. Declining IFO indices also point at lower growth, but not a recession.
The idea underlying Vollgeld is that of full-reserve banking from the 1930’s. In today’s context its side-effects would likely lead to instability and a deflationary tendency. In the Swiss case, uncertainty would have prevailed in the short-term, followed by a further appreciating Swiss Franc.