The president of the European Central Bank believes cryptocurrencies like bitcoin do not pose any threat to the central bank-dependent financial system.
Speaking to the European Parliament on Monday, ECB President Mario Draghi played down the impact of digital currencies on the traditional centralized banking system, claiming their adoption and impacted are too ‘limited’. Cryptocurrencies do not cause any concerns to the central bank’s control of the money supply in the European Union, Reuters quotes the central banker as stating.
We think that all this is pretty limited. So, it’s not yet something that could constitute a risk for central banks.
The remarks come in a week when ECB council member Ewald Nowotny revealed plans by central bankers and legislators toward cryptocurrency regulations in the region. Nowotny, who serves as the current president and governor of Austria’s central bank, pointed to China’s example wherein an extreme regulation against the industry has led to the shuttering of bitcoin exchanges and a complete ban on initial coin offering (ICO) fundraising activity. The official has voiced concerns against bitcoin in the past, claiming it doesn't fulfill the role of a currency due to its ‘instability’.
Earlier this month, ECB vice-president Vitor Constancio dismissed cryptocurrencies as a ‘misnomer’ that will never replace the fiat central banking system. “The so-called private ‘cryptocurrencies’ can never prevail as general money substitutes’ he added.
Draghi, who previously headed Italy’s central bank claimed bitcoin and other cryptocurrencies aren’t “mature” enough to be considered for regulation. Still, he added that innovations like bitcoin should be “cherished” for their potential benefits while “critically assessed” by authorities for risks.
The ECB chief was asked about regulating cryptocurrencies earlier in October during a meeting of the European Parliament’s Committee on Economic and Monetary Affairs. “Certainly it’s not within our powers to prohibit or to do something of the nature…or to regulate bitcoin,” he admitted, revealing the European Central Bank had little authority to regulate cryptocurrencies like bitcoin.
Featured image from Flickr/European Parliament.