Bitcoin Futures Are a Threat to Whole Banking System, Fears ECB Director

While major stock brokers are lining up to add bitcoin futures to their platforms, central bankers are apparently not too happy about it. A member of the European Central Bank (ECB) executive board has called the instruments a threat to the financial stability of the entire banking system.

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Major Threat to Financial Stability

In an interview with German financial daily Börsen-Zeitung, ECB director Yves Mersch sounded the alarm on financial institutions investing in bitcoin futures like those offered by the Cboe and CME. “There are now banks which hold positions in bitcoin. It is a matter for the supervisors to judge how big the risks are, he said. “What concerns me most, is when financial market infrastructures such as stock exchanges enter this business. That poses a major threat to financial stability.”

Regarding the systematic risks and his position on the central bank’s involvement, he explained: “If these transactions are kept separate from others, it’s a secondary matter who wins and who loses. However, if all the participants in these financial centers are jointly liable, that can create difficulties, for instance, for banks or the whole system. And if the banking system gets into trouble, there will again be demands for support from the ECB. I would say from the outset: we shouldn’t do this.”

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