Yves Mersch, a member of the executive committee of the European Central Bank (ECB) said bitcoin and similar unregulated cryptocurrencies pose a real risk to the established financial order.
In an interview with the German newspaper Boersen Zeitung, Mersch warned the entirely speculative nature of bitcoin’s value was a ‘cause for concern.’
Mersch also warned against banks investing in cryptocurrency.
He said: “When financial market infrastructures such as stock exchanges enter this business, there is a risk to the financial stability.”
But he indicated that some process of ‘normalisation’ to embrace bitcoin should be undertaken – and sooner rather than later – but that it should be ‘careful and gradual’.
In addition, Mersch was concerned by the fact that negative interest rates can have negative effects and erode the savings culture.
“Can you imagine that a whole generation grows without knowing what it means to earn interest for your money?” said the Luxembourg banker.
He suggested banks should speed up the introduction of instant payments to counter the allure of digital currencies such as bitcoin.
One of the attractions of cryptocurrencies like bitcoin and Litecoin is that they circumvent bank bureaucracy and delay.
Mr Mersch urged commercial banks to provide an alternative.
He said: “Banks need to implement instant payments as soon as possible and provide an alternative narrative to the ongoing public debate on the alleged innovation brought by virtual currency schemes.”
This article was curated from Google News. You can read the original article here.