BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - A Director of the European Central Bank (ECB) has warned that a move by financial market infrastructures such as stock exchanges to add bitcoin futures to their platforms is a threat to the financial stability of the entire banking system.
In an interview with German financial daily Börsen-Zeitung, Yves Mersch, a member of the ECB's executive board, sounded the alarm on financial institutions investing in bitcoin futures like those offered by the Cboe and CME.
The most recent spike in bitcoin prices was spurred by the launch of bitcoin future trading in two American exchanges, providing the cryptocurrency with a greater level of credibility in the financial world.
Bitcoin futures began trading on the Chicago Board Options Exchange (CBOE) on December 10, and CME Group a week later.
Bitcoin continues to attract intense media attention as the price of Bitcoin dips and soars.
The digital currency approached $20,000 last month.
The ECB Director said the reason why Bitcoin trading is not at present an issue for monetary policy is that the volume of Bitcoin turnover is - between €250 ($302) and €350 ($422) billion -- comparatively low.
Regarding the increase in price, Mersch said individual investors are free to gamble, but 'if something goes wrong, they should not come to us and say we should have outlawed it and protected them from themselves'.
To a question if private cryptocurrencies could become a real alternative to central bank money, he said ' That's a challenge we all have to face, especially banks. Each institution has to know that in the future financial intermediation will no longer be heaven-sent, but has to be fought for'.
The ECB director had proposed in November that banks should speed up the introduction of instant payments to counter the allure of digital currencies such as Bitcoin.
Copyright RTT News/dpa-AFX