Cryptocurrency news ECB President: Cryptocurrency Price Boom Having Limited Effect on Economy - CRYPTOCURRENCY NEWS

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Friday, July 21, 2017

ECB President: Cryptocurrency Price Boom Having Limited Effect on Economy

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The president of the European Central Bank (ECB) has issued remarks addressing the rising interest in cryptocurrencies as an asset class.
In a letter to members of the European parliament this week, Mario Draghi built on statements made during a May hearing, in which he first discussed financial innovation, including the "rapid pace of development" in digital ledger (DLT) and related technologies. At the time, he cautioned that care must be taken so that fintech, including blockchain and DLT, does not disrupt the financial system.
Published this week, the new letter builds on this commentary, addressing more directly the rise in cryptocurrency prices so far in 2017. Driven by big gains in bitcoin and ether, the value of the total supply of all cryptocurrencies is now $93bn, down slightly from an all-time high of $115bn earlier this year.
Still, in the face of this increase, Draghi used the opportunity to restate his belief that cryptocurrencies still have a limited impact on the financial system.
Draghi wrote:
"Although the market capitalisation of [virtual currency schemes] has increased since the publication of these reports, there is no evidence to suggest that the connection of VCS to the real economy has strengthened significantly."
Citing past research from the ECB, Draghi indicated he still believes there could be a "build-up of risks" due to the use of cryptocurrencies, which may necessitate an international regulatory response.
Still, for now, he said the ECB would likely take steps to continue to monitor the ecosystem, tracking the "number, structure and scope" of public blockchain tokens.
"An increase in the usage of [virtual currency schemes] is conceivable. It is thus important to monitor the take-up of VCS from a financial stability perspective," he said.
For more on how the ECB is approaching blockchain and cryptocurrencies, 
ECB DLT Lead: Central Banks Won't Compete on Blockchain Tech
You might not expect someone at the European Central Bank (ECB), the institution that manages monetary policy and oversees financial market infrastructure for the 28-member European Union, to be interested or even passionate about blockchain tech.
But, Dirk Bullmann, fintech coordinator and adviser to the director general of the ECB, is evidence of how the technology that originally powered bitcoin and cryptocurrencies is beginning to pick up interest in the world's largest institutions. Not only is Bullmann's mandate to explore distributed ledgers, but he's leading a team actively seeking to identify ways to use the tech to enhance the ECB's services.
This isn't to say that Bullmann has bought into the idea that blockchain is disruptive, or that one day the ECB will go so far as to issue its own cryptocurrency. Rather, he thinks it will mark a "fascinating" change in how the world exchanges assets, one he believes could enhance, if not redefine, existing financial processes.
But despite a recognition of the opportunity, he said there isn't competitive interest driving central bank's intrigue in utilizing blockchain.
Bullmann told CoinDesk: >READ MORE

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