ECB Worries About BTC Threatening Financial Stability

JP Buntinx | February 8, 2018 | 10:00 am

ECB Worries About BTC Threatening Financial Stability

JP Buntinx | February 8, 2018 | 10:00 am

Bitcoin has proven to be one of the oddest forms of money to date. Largely ignored by banks at first, the situation today looks very different. Even the European Central Bank has to acknowledge cryptocurrency will not go away. At the same time, they are well aware of the risks associated with this digital money. With financial stability on the line, now is not the time to cut any corners. The recent cryptocurrency market “crash” impacts the real world economy as well.

Everyone will agree Bitcoin can effectively impact the financial stability of any region. Especially in the wake of the 2008 financial crisis, external influences can shake things up dramatically. While most of the world is finally recovering from that crisis, it may not last all that long. Especially now that Bitcoin’s losses are impacting the European economy. These “bridges” between the virtual and real world are becoming more apparent every month. As such, a faltering Bitcoin price can drain liquidity from the real world. Situations like that one are of great concern to the European Central Bank.

European Central Bank Wants More Cryptocurrency Research

Until now, policymakers have not paid too much attention to Bitcoin and similar currencies. This is especially true in the European Union. A few countries introduced their own taxation guidelines, such as The Netherlands. On a European level, however, the ECB has no plans to regulate Bitcoin. Nor do they have the power to do so effectively. However, with the cryptocurrency markets exploding in late 2017 and collapsing this year, a worrisome situation is created. Controlling this new asset class will bring forth many challenges.

The European Central Bank is aware of the cryptocurrency world. While they may not see Bitcoin as a threat just yet, things can change very quickly. Preventing Bitcoin and consorts from draining the real world economy is a different matter, though. For now, the European Central bank will study the risks of digital currencies in the future. Especially Bitcoin futures are considered to be a major risk to financial stability. Whether or not these trading vehicles will ever come to European investors, remains unclear at this point.

It is evident more research is needed before any conclusions can be made. Tackling cryptocurrency regulation is a very touchy subject. This is mainly because no one can control the currencies themselves. Not even the European Central bank would be able to do so. They can introduce more guidelines to help mitigate any impact on local economies. For now, no one knows for sure if and how such a solution will come to market.

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  • SnipSystem

    Yeah, let’s talk about all the crashes we had in the past when bitcoin was not here… We should have banned the central banks sooner. Now come and play our game…

    • pradeep poonia

      Its like all the Evils (Banks, Governments) are coming together to fight against the Hero (Crypto and Blockchain)

      • Manny Myrianthopoulos

        Great thing about this scenario is that the Hero always wins!

        • pradeep poonia

          I hope the Hero wins. But the villain here is very strong, and unless people start educating each other regarding blockchain and crypto, Hero wont win.
          Right now people just see Bitcoin as a crazy asset which fluctuates alot and seems risky. Media actually doesnt talk about the pros of crypto and blockchain in comparison to fiat and old banking system.
          Personally I would love to see all these corrupt banking system fall to ruins.

          • Manny Myrianthopoulos

            Don’t let the Giant frighten you! This story is like Jack and the Bean Stalk. The giant was eventually beaten. This market and industry is the new evolution. I believe that central banks fear the outcome of this but can not control it. They will put up the best fight they can, but in the end, since they wont be able to beat the technology they will join it.

        • SnipSystem

          The heroes of somes are the terrorists of the others.

  • TheTruthCommission

    The only threat to financial stability is the fiat-ponzi scheme that the central bankers have created. They will never be able to pull out of quantitative easing without bankrupting the entire world. They created this fiat-ponzi scheme by printing fiat endlessly until it becomes worthless paper.

    Bitcoin isn’t the problem, it’s the solution.

  • Stephen

    “Especially Bitcoin futures are considered to be a major risk for financial stability.” – False. Historically futures markets were created and serve the purpose of increasing price stability. It is meant to reduce volatility.

  • Pierre

    It’s the control by the banksters that make their market go up and up and up.. or crash overnight. No-one is mentioning the 4T that left non crypto markets last week.. this is a joke we know what they do and this financial stability they speak of is not real anyway..
    Bitcoin losses affecting European economy..? show us the numbers.. vague blanket statements are the norm now, and using words like exploding and collapsing ..FUDmongers.

  • BROS’S Technology – REKLAMALED

    yes, they are feared that they could not control and print money in future … I can imagine this situation …it´s revolution in old finance system and only way to fight again crypto is making lies in media, is what they are doing

  • Jusup Wilkosz

    There was not a single Crash in US history in times without a central bank.

  • The Crypto Booth

    Well this comes as no surprise.

    Quoting “Let us control the money of a country and we care not who makes its laws.” This is the maxim of the house of Rothschilds, and is the foundation principle of European banks.

    There’s a new sheriff in town, folks – crypto. The industrial-age fiat Ponzi is over. The money supply should NEVER be controlled by the same people issuing (printing) it, for obvious reasons. We’re now in the information age where information has come to light and accessible by everyone, and people are waking up to the scam.

    We trust in data. Data is a source of truth, especially data that cannot be manipulated due to cryptography and blockchain technology. Today’s banking ledgers can be manipulated, the blockchain… well good luck manipulating that. These banks, they have every right to fear it because the gig is up. They will never stop crypto in the name of “keeping us safe.” They’ve been stealing from and manipulating people long enough. It was OK to get away with this in the past because it was much easier to keep their practices quiet and out of the public eye. Well, the smoke screen is clearing and in that clearing stands one thing — the blockchain, the source of truth.

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