The president of the European Central Bank has criticized the Estonian government’s plan to launch a national cryptocurrency. The statements have implied that the European Union (EU) states will not be permitted to launch state-issued cryptocurrencies that compete with the Euro as the major currency within EU jurisdiction.
Estonia Had Planned to Launch a State-Administered National Cryptocurrency
The president of the European Central Bank, Mario Draghi, has rejected Estonia’s plans to launch a state-backed national cryptocurrency. Draghi has stated that “no member state can introduce its own currency. The currency of the eurozone is the euro.”
Last month, Estonia unveiled its plan to launch Estcoin, a state-backed national cryptocurrency. Estcoin would be centrally administered by the Republic of Estonia and launched as an ICO. Estonia also planned to make the cryptocurrency available and made available to any investor worldwide through its e-residency program. The Estcoin project has been closely evaluated and praised by Vitalik Buterin, the creator of Ethereum.
Peter Ehrlich of the European Central Bank is reported to have stated that “within the legal framework of the European Union, in all member states that, like Estonia, have introduced the single currency, only the euro is the legal tender and the monetary policy lies exclusively with the European Central Bank.” Daniel Heller of the Peterson Institute for International Economics has echoed this position, adding that EU obligations mandate that governments are unable to raise funds in any currency other than the euro. “If you sign up to the Eurozone, you sign up to the euro. Your financing is in euros”.
Commentators Have Argued That the Project May Still Be Viable Through a Public-Private Partnership
Despite the dismissive statements from the European Central Bank’s president, Estonia may still be able to conduct a launch of a national cryptocurrency if it is to do so through a private-public partnership. Heller advances this argument stating that “what would be possible is if it’s issued by some state-owned entity. We have this distinction that, say, debt of the gas company is not public debt because it’s a gas company, even if it’s owned by the government.” This hypothesis appears to have also been evidenced by Ehrlich stating that “the [European Central Bank] will not comment on ideas brought forward by the private sector”.
The head of Estonia’s E-residency scheme’s public relations department, Arnaud Castaignet, has expressed that the republic plans to move forward with the project – however, made no reference to the potential ramifications of EU obligations with regard to the national cryptocurrency. “We are ready to move forward, nevertheless a national conversation is necessary first. If there is support for this proposal, then the next stage before the ICO would be to provide a white paper that outlines the value of estcoins and how the investment will be used to develop our digital nation.”
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