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The European Central Bank cannot regulate bitocoin

Mario Draghi, president of the European Central Bank (ECB), has indicated that his institution does not have the authority to regulate cryptocurrency.

26.Sep.17 5:08 AM
By Daria Zaytseva


The European Central Bank cannot regulate bitocoin

In his statement to the EC Committee on Economic and Monetary Affairs, Draghi said that “in fact, it would not be in our power to ban and regulate” bitcoin and other digital currencies.

The comments came in response to a question from the committee about whether the ECB intends to work out a regulatory framework or completely ban cryptocurrencies, and whether Draghi thought that to protect the banking sector, higher capital requirements for financials are needed.

Draghi showed that the ECB has not yet discussed the potential impact of the cryptocurrency, but the likely areas of analysis include the risk associated with the cryptocurrency due to its scale, usage and economic impact.

“We have to ask what effects cryptocurrencies have on the economy,” Draghi said, adding that they are still too immature to be considered a viable method of payment.

According to him, the main problem for the ECB surrounding cryptocurrencies, as well as digital innovations, is cybersecurity, stressing that protection from cyber risks plays a central role on the ECB's agenda.

Earlier this month, Draghi also criticized the proposed initiative of Estonia's e-Residency project to create a national cryptocurrency called “estcoin”, saying that: no member state can introduce its currency, because the Eurozone’s currency is the euro. Draghi is not the only high-ranking official of the ECB, who in recent days commented on the cryptocurrencies.

Last week, vice president of the central bank Vitor Constancio said that the cryptocurrencies were purely speculative asset and compared them with the "tulip mania" - a trading bubble of the 17th century that have took place in the Netherlands. Constancio said that the ECB did not see this technology as a "threat to the policy of the central bank."

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