A senior official at the European Central Bank (ECB) has compared the spike in the public’s use of virtual currencies to the gold rush, requesting that countries act to prevent an illegal burst of risk-taking. The senior official at the ECB made the recommendations while addressing a US university.

Details of the Address

During his address, Fabio Panetta, a senior official at the ECB, remarked that increasing unbelief in the traditional banking system has led to a novel virtual gold rush – which the official says is beyond governments’ control.

Panetta also said that the new wave of digital “gold” bursts came about 150 years after US residents’ frenzy for gold in the West. Additionally, Panetta observed that the virtual assets market now has a higher market cap than the subprime mortgage markets in 2008, which stood at $1.3 trillion.

Meanwhile, the executive observed that the subprime mortgage market instigated the 2008 world economic meltdown. The executive’s rhetoric continued with Panetta reportedly likening the dreams of the cryptocurrency industry to a Ponzi scheme.

Moreover, Panetta made further allegations about the virtual assets industry, highlighting the drastic instability in the worth of virtual assets like BTC and ETH. He also criticized that asset transfers may not be processed until hours after initiation.

According to the banker, most cryptocurrency holders depend on middlemen, in contrast to the tenets of DeFi. He remarks that the unreliability that virtual currencies bring is the exact opposite of their promises for the global economy.

ECB Executive Asks for International Regulatory Actions on Cryptocurrency

The executive upholds that virtual assets could create a significant challenge for the global financial system, being speculative currencies. He called for governments worldwide to not make the same errors they made in the past by taking no restrictive actions until there’s a major crisis. The senior official further asserted that the risks attached to virtual currencies have become pervading in the world’s economy.

He further asked for “coordinated” efforts among international agencies to regulate the cryptocurrency industry. Panetta added that the regulatory bodies should make sure that they subject virtual assets to similar standards to those in the conventional economy.

Additionally, the official emphasized that placing stricter controls on the virtual assets industry, as they did with the conventional economy, wouldn’t alone suffice the current economic situation. Pointing at the rising interest in digital currencies and quick transfers, Panetta called on governing banks worldwide to issue digital currencies.

Panetta says issuing digital currencies and advancing entire financial structures would help satisfy consumers’ expressed interests. At the ECB, the banker says the bank is concentrating on a virtual Euro, which would permit EU residents to utilize funds in executing settlements wherever they are within the EU region.

He adds that the institution would uphold the function of the Euro as a central entity in the financial system, despite the creation of the digital Euro. Panetta reportedly supervises the ECB’s initiative on a digital currency.

No Comments.