European Central Bank’s Panetta warns crypto assets are volatile and unsafe
Fabio Panetta, a senior official of the European Central Bank (ECB), on April 25 called for global regulation of cryptocurrencies because the value of this virtual asset is now greater than the value of this virtual asset. The value of risky mortgage loans caused the global financial crisis in 2007 and showed signs of becoming a bubble (an unsustainable and unsustainable spike in asset prices).
The ECB’s official Twitter page quoted Panetta’s speech at Columbia University to warn that crypto assets are bringing about instability and insecurity, “creating a new Wild West”. “Fast-forward a century and a half and, amid the global financial crisis, growing distrust of banks, coupled with technological innovation, gave rise to a new dream – a digital gold rush beyond state control,” said Panetta. But he said they’re not succeeding.
Fabio Panetta, member of the European Central Bank’s executive board
He said regulators need to act before the bubble bursts, the surge in crypto prices, he added, is leading consumers to a fear of missing out. “Like in a Ponzi scheme, such dynamics can only continue as long as a growing number of investors believe that prices will continue to increase and that there can be fiat value unbacked by any stream of revenue or guarantee. Until the enthusiasm vanishes and the bubble bursts,” said Panetta.
Christophe Barraud, a French Chief Economist who is a famous strategist re-emphasized his view on cryptocurrencies and said that measures are needed to regulate this market.
Cryptocurrencies like Bitcoin (BTC) have so far largely been outside of regulation, but authorities in many countries are taking a closer look at the threat they can pose to financial systems posed to their volatility and the growing size of the virtual currency market.
Panetta’s appeal echoes that of Andrew Bailey, Bank of England’s governor, who believes that crypto is the new front line for scams. The Bank of England, which last month also stepped up oversight to prevent cryptocurrencies from becoming a risk to financial stability.
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