Germany’s central bank chief pushes for sovereign digital euro, still sees Bitcoin as ‘digital tulip’

The president of Bundesbank, Joachim Nagel, said that the European Union needs the digital currency controlled by the State as a guarantee against the domination of the private sector in global finance.

Joachim Nagel, head of the German central bank, does not change their minds on the crypto, putting pressure for a digital euro to help Europe remain financially independent.

Speaking during an OMFIF event at the London School of Economics, Nagel stressed that the European Central Bank should remain cautious about monetary policy, rejecting Bitcoin (BTC) as “more like an asset class” and describing it as “the opposite of transparent”. He also called cryptocurrency with a market capitalization of 2 dollars of a speculative bubble, comparing it to a “digital tulip”.

Commenting on calls for certain central banks to start holding Bitcoin as a reserve, Nagel said that central banks should remain skeptical.

“It is not something that central banks should look at. It is not a liquid form of something you want in the balance sheet. We should be very careful here.

Joachim Nagel

Instead, Nagel has argued that a digital euro would help Europe stand against domination of the private sector, because the digital currencies of the Central Bank “will play a role in future resilience [of Europe]. “The Bundesbank chief also warned that foreign payment systems could be” used in a digital environment as a form of weapon “, but did not know the question.

Speaking at the DZ Bank Capital Markets conference in 2024, Nagel underlines that financial institutions and other payment service providers dealing with digital euros “would not be authorized to use personal data related to transactions for commercial purposes”. However, he noted that this restriction would only be lifted if users explicitly granted their consent.

Europe divided on Bitcoin as reserve assets

At the end of January this year, the governor of the Czech Central Bank Ales Michl suggested Use Bitcoin as a reserve asset for the central bank. The idea aroused people from cryptography, but it was not suitable for all decision -makers. The president of the European Central Bank, Christine Lagarde, closed it, claiming that “the reserves must be liquid, that the reserves must be safe, that they must be safe”.

After Michl’s proposal, the Board of Directors of the Czech National Bank requested a study to examine Bitcoin as a reserve asset. But now sources say The study could take months to finish. And even if it supports Bitcoin purchases, CNB exposure would probably remain less than 1% of the total reserves, far from the 5% initially suggested.