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Weidmann of the Bundesbank says, ” virtual currencies are likely to undermine the banks, as it has been used on a large scale

FILE PHOTO of German Bundesbank President Jens Weidmann speaks during a news conference at the g-20 group of Finance Ministers and Central bank governors ‘ Meeting in Fukuoka, Japan on June 9, 2019. REUTERS/Kim Kyung-Hoon/Pool

FRANKFURT (Reuters) – Virtual tokens associated with the official currency, also known as the stablecoins, are likely to undermine the banks, if they are on a large scale, of the head of the German central bank said on Friday.

Under such circumstances, they would almost certainly be in the great outdoors, not just in terms of operational risk, but also in a more fundamental way: it would undermine the take up of fixed-term deposits with banks and their business models,” Jens Weidmann told a conference held by the Bundesbank.

“It would be to disrupt the transaction, banking, and financial markets and intermediaries,” Weidmann, who also sits on the European Central Bank’s governing Council, said.

In the US, social network Facebook this week announced plans to set up its own payment system, supported by a stablecoin is the call sign of Libra.

Reporting by Francesco Canepa; editing by John Stonestreet

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