ECB study­ing dig­i­tal cur­rency risks for banks: Draghi

The Pak Banker - - FRONT PAGE - -REUTERS

FRANK­FURT: Mario Draghi said the Euro­pean Cen­tral Bank's su­per­vi­sion arm is study­ing the risks that dig­i­tal cur­ren­cies may pose to banks' bal­ance sheets. "Right now dig­i­tal cur­ren­cies are not sub­ject to a spe­cific su­per­vi­sory ap­proach," the ECB pres­i­dent said re­spond­ing to law­mak­ers' ques­tions at the Euro­pean Par­lia­ment on Mon­day. "Work is un­der­way in the SSM to iden­tify po­ten­tial pru­den­tial risks that th­ese dig­i­tal as­sets could pose to su­per­vised in­sti­tu­tions."

Draghi stressed that bitcoin and other cryp­tocur­ren­cies are "very risky as­sets" that ex­ist in an "un­reg­u­lated space." Bitcoin fell about 17 per­cent against the dol­lar on Mon­day and has lost about half its value since the start of the year. "We are not ob­serv­ing a sys­tem­i­cally rel­e­vant hold­ing of dig­i­tal cur­ren­cies by su­per­vised in­sti­tu­tions - - by banks in other words. Ac­tu­ally the credit in­sti­tu­tions es­tab­lished in the Euro­pean Union are show­ing lim­ited ap­petite for dig­i­tal cur­ren­cies, like Bitcoin, notwith­stand­ing the high level of pub­lic in­ter­est." Still, the ECB chief said the bank needed to keep an eye on cryp­tocur­ren­cies as new risks arise, such as Bitcoin fu­tures con­tracts on U.S. ex­changes. "There­fore we cer­tainly look at that," he said.

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