ECB report: Bitcoin & co. could jeopardize the financial stability

The European Central Bank ECB warns in its latest report that crypto-currencies could threaten the stability of the financial sector in the future. Among other things, is currently not clear how many banks are investing in crypto-systems and the degree to which the traditional economic and financial accounting with the prices of digital currencies is connected. Information gaps needed to be resolved.

By David Barkhausen
8. August 2019BTC$11.683,00 -2.52%part Facebook Twitter LinkedIn xing mail

For many financial analysts, the markets of Bitcoin & co. are shrouded in mystery. Who owns how many Coins, what they are used for and what are the driving springs and the prices are soaring or sagging can, it can often only be speculated.

The European Central Bank (ECB), the common monetary authority of the Eurozone, sees this gap in information is critical. In your recent report, you lit this Wednesday, the 7. In August, both the risks of crypto-systems, as well as their possible hand to have. The Central Bank comes to the conclusion that there was a lack of currently reliable, comprehensive data to the crypto sector.

This is not how to estimate the traditional financial sector is intertwined with the crypto-business, as many Fund companies and banks in Bitcoin, Ether, or other currencies invested, and a possible Crash of the currencies could be affected. In addition, currently it is not clear how high the output volume of lending to investors was.

it is said in the report:

There is a large data gap in terms of linkages with the real economy and the financial sector, [this concerns] the crypto-assets of banks or financial companies, as well as information on the lending for crypto investments.

Here, the authors concern was the appropriate banking regulation with a view on risk positions is currently still in the vacuum. Of regulations and Standards, how much of your balance sheet sums of money houses in crypto-currencies are allowed to invest, lack.

risk grows with the proliferation of Cryptocurrencies

In this state of uncertainty the currency see the guardian for future "extreme situations" of potential dangers for the financial stability of the Euro area, should be able to find crypto-currencies have wider application.

Measured by the degree to which links crypto could mean facilities for the financial system risks. Spillover effects may be transmitted to the real economy. Crypto-systems could then affect, in particular, [ ... ] the functioning of the payment transactions as well as existing market infrastructure and also the consequences for monetary policy, bring,

the report seems to be decided by the current governing Mantra to avert the crypto currencies, so far as monetary policy is largely irrelevant had dismissed.

However, governments would not need to be afraid of "extreme scenarios" in the immediate future. Because on the one hand, the investments on the part of the banks currently manageable. On the other hand, crypto-currencies were due to the high fluctuations in the value of only limited use in the mass market.

stablecoins could, however, change how you are these days, always in the centre of the public debate, this. The authors are sure that in the future as the value of stable payment could show a medium useful. This, in turn, could increase the attractiveness of crypto-currencies.

the ECB wants to close data gaps

First of all it is necessary on the part of Central banks, corresponding information gaps with a view both to on-Chain and Off-Chain data, in order to capture the entire extent of the crypto sector.

Currently, such Monitoring of transactions is difficult, however, due to different data standards of the various stock exchange operators and statistics companies. In addition, the examiner motion, the authorities would need to adapt to constant new developments, and so on the pulse of the time.

While international institutions such as the Irving Fisher Committee (IFC) for Central Bank statistics statistical surveys with a view to the crypto-markets are already pushing, it must also file the ECB in its analysis to future risks in a timely manner to absorb.

financial risk Bitcoin: The devil is in the Bank's balance sheet

at the Latest, with the global financial crisis, which was triggered, among other things, by over-indebted banks and the dissemination of rotten securities, to observe for regulators and financial authorities, the balance sheets of financial institutions with Argus eyes. Risk factors for a coming crisis, one wants to exclude as far as possible.

Before that, in the future, also crypto-currencies as an asset class, an important role could play, not only warns of the ECB. The European banking authority (EBA) and the Basel Committee on banking supervision see the need for a corresponding monitoring system, as well as relevant regulations.

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