According to the European Central Bank - “Cryptocurrencies are Infecting the Global Financial System”

Get Into Cryptocurrency Trading Today

In a recent interview, Yves Mersch, Executive Member of the European Central Bank, clarified the bank’s stance on cryptocurrencies.

An Eldorado of Fool’s Gold

It was to protect the population that Mersch highlighted the central bank’s point of view. According to him, the growing popularity of cryptocurrencies poses a problem that has both social and psychological consequences.

“When there are increasingly more links between the virtual world and the real world, and there is a recession in the virtual world, it could cause problems in the real world. Then, it becomes an issue for the Central Bank.”

Therefore, the ECB must play a part in the current situation and restore the people’s confidence in the world of finance. There is currently so much money flowing through the virtual world that it seems to be a gold rush. Only, there is no gold.

This link between the virtual world and the real world of finance was illustrated earlier this week with a collapse on both the stock markets and the crypto markets. The collapse was likely the result of a decision made by a contingent of banks to ban the purchase of cryptocurrency using a credit card.

A Fork in the Road

The success of cryptocurrency in the financial world was not possible without the help of several large financial players.

At a recent meeting in Frankfort, Mersch made mentions of the greed of these financial players which pushes them towards cryptocurrency.

In fact, Robert Kaplan, the president of the Federal Reserve Bank of Dallas, has defended their use of cryptocurrency by stating, “Cryptocurrencies are here to stay, and financial authorities must become familiar with them.”

Mersch also commented on a statement made by the President of the International Bank of Settlements (BIS), Augustine Carstens, who also denounced cryptocurrencies, calling them a Ponzi scheme that threatens the stability of the world’s financial markets.

"You would not be surprised to learn that the ECB shares these views. We share the same concerns and are working to take proactive measures.”

Mersch and Carstens share the same point of view and both believe it is only a matter of time before financial authorities will take control of virtual currency. However, Mersch believes that the ECB will be more of a supervisor than a regulator. “Of course, financial supervisors can also impose restrictions and requirements, especially when it comes to limiting risk and encouraging caution.”

In Search of a Solution

Mersch ended his statements by looking at the mixed opinions about the world of finance.

"Already, to stop the infection from spreading to the traditional financial system, regulatory attempts are being put in place at the regional level until a final decision is taken at the G20 summit. For a better answer, we need more information. Regulations could be put in place on trading platforms to record their transactions. This way, we would be able to review their records.”

France and Germany have already made promises to bring up the topic at the next meeting of the world’s 20 largest economies, which is to be held in Argentina. So far, there have been proposals for better regulations to prevent cryptocurrency from becoming an unstable speculative bubble.

Buy & Sell Cryptocurrency Instantly