New German Chancellor Olaf Scholz calls for the state currency monopoly

Amid the latest price surge, propelling the crypto market above $3 trillion, Germany’s new chancellor Olaf Scholz warned over a “tulip bubble” developing over the crypto market, calling to keep “the currency monopoly” in the “hands of states.”

“I would doubt whether [Bitcoin and cryptocurrencies have] any prospects as a currency model,” Scholz, who has served as Germany’s finance minister, said back in 2018, Forbes reported. “The danger is high that it will become a tulip inflation,” added Scholz, referring to the famous speculative tulip bubble that began in 17th century Amsterdam.

Supporting Germany’s efforts to transition to a green economy, Scholz also warned over the energy-intensive way the decentralized Bitcoin network is maintained.

According to the University of Cambridge Bitcoin Electricity Consumption Index, The Bitcoin network is thought to consume almost 200 terawatt-hours of electricity annually, which is comparable to the power consumption of Thailand. Earlier this month, Swedish authorities called on the European Union to ban energy-intensive Bitcoin and crypto creation and network maintenance—a process known as mining.

Recently, Scholz also criticized Facebook’s plans to launch its own cryptocurrency Diem, calling changes made by the social network to address regulator concerns “cosmetic.”

“I do not support private-sector digital currencies,” he said in November 2020, adding: “We must do everything possible to make sure the currency monopoly remains in the hands of states.”

Scholz is not the only world leader who warns over growing Bitcoin and cryptocurrency use.

Last week, Hillary Clinton, the former US presidential hopeful and secretary of state, said the rise of bitcoin and cryptocurrencies could undermine the US dollar’s reserve currency status.

“What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilizing nations, perhaps starting with small ones but going much larger,” Clinton said, speaking at the Bloomberg New Economy Forum in Singapore, and added that she hopes “nation-states start paying greater attention to is the rise of cryptocurrency.”