Blockchain Technology Should Be Monitored

Blockchain Technology Should Be Monitored

- ECB President, Mario Draghi, SaysMario Draghi has reportedly said that the European Central Bank (ECB) is closely monitoring distributed ledger

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– ECB President, Mario Draghi, Says

Mario Draghi has reportedly said that the European Central Bank (ECB) is closely monitoring distributed ledger technology (DLT) such as the blockchain within the payment systems to avoid risks of fragmentation of the market.

In May 2017, he made an introductory statement at the Economic and Monetary Affairs Committee (ECON) of the European Parliament in Brussels (available here).

“So as you can see, fintech has the potential to improve efficiency in the financial sector, create better products and push prices down for consumers. But it has other dimensions too, in the shape of potential risks and new regulatory questions. It is in all our interests to rise to this challenge.”, he said.

“As fintech involves the entire financial sector, different regulatory responses are likely to be needed. Depending on the nature of the fintech activity, those responses may need to encompass prudential, consumer protection and other regulation – but, at the same time, they should not hamper healthy developments.”, he elaborated, while commenting on the relevance of financial innovation for the ECB and the euro area.

The approach of ECB is cautious, but open to the possible application of the blockchain technology, as the online media speculated.

However, the ECB seems to oppose Bitcoin. In October the European Central Bank reportedly proposed a directive of the European Parliament and of the Council stating that “virtual currencies do not qualify as currencies from a Union perspective”, as reported at the time. The ECB also argued that the digital currencies should not be defined as legal currencies or money, as the report explained.

While the ECB opposes virtual currencies, it has also published a report saying that they are not threatening banks, as the online media wrote in an earlier report.