The European Central Bank (ECB) is the central bank of the European Union and is therefore considered one of the world’s most important banks. One of the objectives of the ECB is to regulate the monetary policies in the EU.
In a recent report, the ECB now says that cryptocurrencies currently do not pose a threat to financial stability in the EU, Coindesk reports.
Limited connections to the financial system
According to the report, the ECB says that the combined market value of all cryptocurrencies is relatively small compared to the regular monetary fiat system.
In addition, the central bank considers that the linkages to the financial sector are limited while cryptocurrencies are not used as a means of payment to any great extent. The number of merchants who accept bitcoin in exchange for goods and services is “very low”, according to the ECB.
“The high price volatility of crypto-assets, the absence of central bank backing and the limited acceptance among merchants prevent crypto-assets from being currently used as substitutes for cash and deposits, as well as making it very difficult for crypto-assets to fulfil the characteristics of a monetary asset in the near future”, ECB writes in the report.
No central bank digital currency
The ECB also writes that it is currently not interested in issuing its own digital currency, although it is open to exploring the possibilities in the future.
The central bank also writes that the risks associated with cryptocurrencies and blockchain technology are “limited and/or manageable on the basis of the existing regulatory and oversight frameworks”, Coindesk reports.
