On November 20, 2017, ECB president Mario Draghi spoke before the European Parliament’s Economic and Monetary Affairs Committee. Although not included in his prepared remarks, Draghi reportedly addressed cryptocurrencies during the questions segment. “We think that all this is pretty limited,” he said, concisely explaining the ECB’s rather myopic perception of digital currency that isn’t backed by fiat. “It’s not yet something that could constitute a risk for central banks,” he added, leaving the door open for future discussion.
Draghi’s responses echoed the sentiments of ECB vice president Vítor Constâncio, who laughed bitcoin out the door in September 2017. “We don’t see it as a threat to central banking or monetary policy, that’s for sure,” said Constâncio dismissively. Since then, bitcoin has nearly doubled in value.
As bitcoin climbs past $8,000 and Ether enjoys a steady run to $370, the collective cryptocurrency ecosystem is on the brink of $250 billion. And yet, the ECB appears unperturbed. The question is, at what point (or market cap) will the ECB start taking cryptocurrency seriously?
Last week, ECB Governing Council Member Ewald Nowotny (who serves as governor of the Austrian Central Bank) provided a more cautious outlook than Draghi or Constâncio. Nowotny shared that there are ongoing discussions about potential regulatory intervention regarding digital currency. “We’re asking ourselves if legislators or central banks should intervene, as happened in China where they banned (the use of cryptocurrencies) because they consider them fraudulent,” he said. So, perhaps the ECB is a bit more anxious about cryptocurrency than Draghi’s statements might lead his audience to believe.
Previously, in October 2017, Nowotny revealed that the ECB itself was considering restrictions on the use of cryptocurrencies in the eurozone. But, for now, the ECB’s strongest statement remains Draghi’s September 2017 rejection of proposed national cryptocurrencies.
It’s been said that still waters run deep. Taking stock of the various accounts by Draghi, Constâncio, and Nowotny, it appears that the ECB possesses legitimate and growing concerns about cryptocurrency.