Bitcoin Threatens Europe’s Financial Stability – European Central Bank Executivebr>
Yves Mersch, European Central Bank (ECB) executive board director, said that the speculative nature of trading cryptocurrencies such as bitcoin poses a threat to Europe’s financial stability.
During a recent interview with German newspaper Boersen Zeitung, Mersch said that the entirely speculative nature of bitcoin’s value was a cause for concern. He stated that when financial market infrastructures such as stock exchanges enter this business, there is a risk to the overall financial stability.
The Luxembourg banker added that negative interest rates can erode the savings culture. Low interest rates create a financial environment in which saving is not financially sustainable, since people are not earning any interest on their money.
“Can you imagine that a whole generation grows up without knowing what it means to earn interest for your money?” said Mersch.
Last month, Mersch urged commercial banks to provide an alternative. He said that that banks should speed up the introduction of instant payments to counter the rise of cryptocurrencies such as bitcoin. Mersch also said the ECB would “experiment with cash on different digital technologies” but did not see scope for “adventurous applications” of such technology.
“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,” he said.