German Banker

Top German Banker Warns Cryptocurrencies Could Precipitate a Financial Crisis

A top German banker, Jens Weidmann, commented Wednesday that digital currencies like bitcoin could cause a financial catastrophe. The banker alluded to the idea digital currencies are unstable and prone to violent fluctuations on the market. Weidmann said for people to expect banks to adopt digital currencies so the average citizen begin to have faith in them. 

Also read: Localbitcoins Introduces New Fee Structure

Jens Weidmann

A Business Insider article further suggested the banking system has a leg up on digital currencies, because they have the ability to print as much money as they want. In other words, they can avert a financial collapse by magically creating more liquidity.

The article quoted Weidmann, saying, “This is a feature which will become relevant especially in times of crisis – when there will be a strong incentive for money holders to switch bank deposits into the official digital currency simply at the push of a button.”

The article’s author also said the banker’s position was that when banks have their own digital currencies, they can use various features to protect the banks from going on bank runs. They could provide people with digital assets so they don’t start taking all their cash out of the bank. The article read:

Weidmann’s basic point is that by making currencies fully digital in future, withdrawing money from a bank would become much more simple. Instead of physically having to visit a cashpoint or bank branch to withdraw cash, customers could do it online. In times of crisis, when people tend to take money out of their accounts so they can have the perceived safety of cash, causing the phenomenon of the bank run.

Trust In Cryptocurrencies; Various Banking Narratives

What the German banker and Business Insider article imply is that digital currencies will not cause a financial crisis alone. A financial crisis will only occur if banks do not have absolute dominion over digital assets, in order to help stabilize them. They are suggesting that people cannot trust cryptocurrencies, but they can trust the regulators and bankers to control their digital wealth for them.

This is a current theme within the banking Top German Banker Warns Cryptocurrencies Could Precipitate a Financial Crisisconglomerates’ narrative. Many banks and banking elites have taken notice of the stellar rise of cryptocurrencies, especially bitcoin and Ethereum. In this sense, they have issued commentary about regulating and usurping these digital assets.

Recently, covered commentary by Investment Bank Stanley Morgan, in which they said bitcoin would not grow without adequate regulations and control. These controls presumably include the use of “permissioned blockchains.” In some places, courts have actually given banks authority to deny service to blockchain-based companies. This happened in Israel, because “The bank told the court that it fears how criminal organizations can send their ‘monkeys’ to buy bitcoins and transfer them to wallets under their control.”

However, not all banks have had as a heavy-handed mindset. In Russia, bankers want to regulate the currency, but they want to embrace it as well. They do not appear wanting to control it to the point of trying to undermine its original purpose. They certainly do not believe the currency will cause a financial collapse and destroy all the things.

Will cryptocurrencies like bitcoin remain unstable and volatile without help of central bankers? Let us know what you think in the comments below.

Images via Shutterstock

At all comments containing links are automatically held up for moderation in the Disqus system. That means an editor has to take a look at the comment to approve it. This is due to the many, repetitive, spam and scam links people post under our articles. We do not censor any comment content based on politics or personal opinions. So, please be patient. Your comment will be published.

  • David Pennock

    Really …..?? And that massive debt bubble in the west is ok ? Get real people are looking for an exit from the fiat (centralized) banking system.

    • David Pennock

      “absolute dominion over digital assets, in order to help stabilize them” …what he means is total control over a decentralized banking system so that they can tax and exploit it like the present banking system and keep everyone as slaves to the system …those days are over folks , how many blockchains shall we build ?

  • Liberty88

    Top German German Banker warns that crypto currencies are going to overturn the Deep state apple cart —- that’s what he really means.

  • Riaan Walters

    It’s because of banks and their knack to want to control things that this is happening in the first place, people do not want the banks to control this. One hell of a delusion you are living in Mr. Weidmann

  • Mike

    Slowly but surely, as anticipated, the fear is setting in and we’re hit with this “news” warning us that crypto will cause chaos and wreak havoc on society (and by society I mean the scum of the banking industry responsible for the mess we’re in to begin with).

  • Jean-luc Lejoly

    sounds more like the banks are fearing for their own exisitence, and that cryptocurrenciies they cannot control will make it more difficult for them to prove their own solvency.

    • Mauro

      before of all their bonuses

    • Global Services Ltda

      Banks as well as beaurocrats and politicians are always looking to justify their existence, i.e., inflated salaries.

  • Phil Maher

    real free markets are too scary for the average Joe…they can’t handle a 25% daily move in either direction.

  • Burstcoin for the win!!

  • Rene Vice

    Mm…the Over Lords are nervous… gee, it’s amazing how they squirm when the power is slipping away..

    • Sadhaka Padma

      lets wait till cryptospace jump on one trilion usd…crocodile tears coming.

  • DM500S

    Weidman is not clear with that fud, first he say yes bitcoin is good for asset investment that can provide bether inflatery and he is also sceptic…whatever…. now he spread spinnout from first fud lol hey banker you are stilll the devil you will not change that is why im came her to tell you you selling to people crap and now try to Bitcoin that is system what you and your Co use last 100 years

  • Oliver Olmos

    Banks make trillions of dollars trading people’s money! What happened to the Swiss Franc in 2015? A lot of people lost a lot of money while other made millions… all because of bankers decisions… All banks have millions of dollars invested in Software algorithms to trade people’s money. They hire companies such as Tata to have engineers monitoring scripts… They are the ones controlling financial crisis and they don’t want to lose control!

  • sjs

    Cryptos may well precipitate a financial crisis but only to the extent that they highlight the fiat paper money printing debasement of ‘real money’. If Gold and Silver were let out jail the same could be said for them. Trust a banker? Not in my lifetime!

  • Global Services Ltda

    Yes of course, greedy bankers and the rigged casino financial system alone could never cause a financial crisis such as 2008, 1987, 1973 and 1929. (Cough!)
    Now they have cryptocurrency as an excuse for emergencies which basically they have always had, transfers were done by internet, telex, etc., no cash ever exchanged hands.
    The next financial crisis that ruins average worker’s pensions and savings that requires trillion$$$ in bailout cash to put billion$$$ in the pockets of the thugs of Wall St., Hang Seng, DAX, FTSE, STI, CME and others will be blamed on cryptocurrency.
    I am not a fortune teller but I have been trading securities long enough to know these parasites will make cryptocurrency, i.e., BTC and ETH the targets plus they will undoubtedly use blockchain to reinforce their allegations.
    Bankers are master con artists and thieves with fed permission and public acceptance.
    The most beautiful scam in history.

  • It sounds like Weidmann wants to give customers a bankcoin instead of FIAT in times of trouble for the Bank when the governments limit withdrawals during a run on the bank. I am not so sure he is supporting a particular popular coin of the day. Smells like he is thinking of starting a legal government backed Madoff ponzi scheme coin. Watch out depositors, they may offer you a new liquid security in a crypto-guise.

  • Ken Mizell

    I see a guy in a gray Dr. Evil suit saying with a German accent and making air quotes with his fingers:


    ..meaning “you can’t notice that we’ve only got a fraction of the deposits on hand (because we loaned them out at 10 times the deposit amounts…) since we can’t really give you the cash, we’ll pretend… with computers… to give you the cash (or give worthless paper to the crypto exchanges as ETH goes to the moon)…” Yay, everybody wins!!!!

    as Fiat currency becomes toilet paper.

  • Robert_

    “….banks have their own digital currencies, they can use various features to protect the banks from going on bank runs….”
    SERIOUSLY, he said that? Yes, you do have something to protect banks, Gov’t, Tax payers, Quantitative Easing, printing presses, Bail-in’s, and possession of deposited funds.
    And that’s why Bitcoin. It doesn’t need any “features”
    “… could cause a financial catastrophe…”
    Only for the banks, and those that believe in them.

  • Vako

    Is that fear I smell?

    Fed reserves missing 4 trillion could have been found with the blockchain

    I bet the banks don’t like that

  • Tochukwu

    The Banks are afraid that they may not be able to rob the masses again.

  • JoeM

    The global bankers and politicians see that we the people are not reacting to what they say or threaten to do to cryptocurrencies. More and more money keeps pouring into these currencies and it’s freaking them out. Notice how their language sounds more threatening by the day. They are pressuring politicians to legislate so they can both get back to the same old routines.

  • LaneMusgrave

    Like they protected us in 2008? GTFOH

  • Frank Snell

    They are Looking for someone else to put the blame on for their…..

  • 4siteonline

    you really think you have a handle on banking anymore, fucking clowns get trained to do something

  • Sadhaka Padma

    As monarchies shortly after 1918 went away forever…same is happening with banks around 2018. Vivat revolution…vivat Blockchain.

  • CryptoSam

    Srsly?? Bankosaurus Rex still doesn’t see the comet.

  • RaShane

    What have the banks done since central banks were first created!! Banks its because of you and the government’s across globe the reason for bitcoin creation.