- The ECB publishes the report focused on cryptocurrency industry risks monitoring.
- The risks of spillover effect on the real economy are limited now.
The European Central Bank (ECB) published a report “Understanding the crypto-asset phenomenon, its risks and measurement issues”. The document outlines the need for continuous monitoring of the crypto industry development.
"The ECB has been analyzing the crypto-asset phenomenon with a view to identifying and monitoring potential implications for monetary policy and the risks crypto-assets may pose to the smooth functioning of market infrastructures and payments, as well as for the stability of the financial system,” the report says
In particular, ECB experts believe that the “community of central banks” should improve the tools used for cryptocurrency transaction monitoring.
Huge data gaps remain unaddressed in the current framework, which makes it harder to effectively monitor the risks and developments within the cryptocurrency industry, the ECB believes.
Also, despite that blockchains are deemed to be transparent, transaction data is collected haphazardly, which also prevents regulators from assessing the state of the market. Further work is needed to obtain relevant insights from public networks.
ECB analysts emphasized that it was vital to build a solid statistical classification for crypto assets and develop the basic requirements for the industry.
"To ensure the consistency of its analysis over time and across technologies, the ECB has chosen to define crypto-assets as “a new type of asset recorded in digital form and enabled by the use of cryptography that is not and does not represent a financial claim on, or a liability of, any identifiable entity.”
Notably, the ECB mentioned that the risks from crypto-assets could have spillover effects on the financial stability and real economy; however, at this point such risks are contained.
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