The President of the ECB has recently admitted that banks in the EU might soon start holding Bitcoin positions after major exchanges in the US began to offer Bitcoin futures contracts. He made this statement as he delivered the opening statement and closing remarks at a meeting of the European Parliament. During his remarks, President Mario Draghi talked a bit about digital currencies in reference to their discussion by other speakers during the meeting.
He said that he had yet to observe any trend of European banks holding cryptocurrencies. The banking chief also pointed out that financial institutions in the EU had shown a limited interest in digital currencies. This was, according to him, despite the fact that the European public had shown a great interest in and appetite for digital currencies.
He noted that this trend might soon change, with cryptocurrencies permeating into mainstream finance:
However, recent developments, such as the listing of Bitcoin futures contracts by US exchanges, could lead European banks too to hold positions in Bitcoin, and therefore we will certainly look at that.
This comment was followed up by an admission that Bitcoin and other cryptocurrencies were unregulated. He added that they were risky assets, and banks needed to proactively consider the risks if they decided to make them part of their portfolio. To the contempt of many bankers in Wall Street, the largest derivatives exchange in the world, the CME Group, listed Bitcoin futures contracts starting in mid-December 2017. This was after CBOE, their main competitor, had listed their futures contracts a week earlier.
The head of the EU’s Central Bank also suggested that there might be an upcoming uniforms oversight for digital assets. This single supervisory mechanism would oversee the risks of digital assets to banks or other supervised institutions.
The Role of the ECB in Regulating Bitcoin
In the past, Draghi has stated that the European Central Bank does not have the authority to regulate digital assets. Thus, if a body were formed, as per his remarks this week, it would be a supervisory body rather than a regulatory one. However, his statements have been contradictory in recent years. In October 2016, he suggested that digital currencies had reached a level where the ECB would consider their regulation. After that, he remained quite silent about the issue until recently.
In November of 2017, he said that the impact of digital currencies on the European financial system was very limited. He said that he did not see it posing any kind of risk to the central banks. This was especially in consideration of the fact that digital currencies were created as a rejection of the control of a money supply by any single institution.
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