Bitcoin
$63,351.25-4.62%
Ethereum
$3,096.17-4.54%
Binance Coin
$551.25-4.86%
Solana
$137.03-11.81%
XRP
$0.49690031-3.86%
Dogecoin
$0.15743227-5.82%
Toncoin
$6.35-10.66%
Cardano
$0.46919984-4.19%
Avalanche
$35.48-7.22%
Shiba Inu
$0.00002185-7.68%
Wrapped Bitcoin
$63,500.15-4.82%
Tron
$0.11141102-3.45%
PlayIconNav
Crypto Prices CoinDesk 20 Index CoinDesk 20 Index
Consensus 2024Price Increase Extension Ends In
04
DAYS
12
HR
38
MIN
33
SEC
Policy

ECB Sounds Alarm Over Linkages Between Stablecoins and Conventional Financial Markets

The central bank said exotic market segments, such as crypto, remain subject to “speculative bouts of volatility.”

By Parikshit Mishra
AccessTimeIconNov 17, 2021 at 12:10 p.m. UTC
Updated May 11, 2023 at 4:40 p.m. UTC
ECB building in Frankfurt (Shutterstock)

ECB building in Frankfurt (Shutterstock)

10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The search for higher yields amid rising inflation and falling interest rates has led investors to take greater risks, making a broad section of the market, including crypto, vulnerable to corrections, the European Central Bank (ECB) said.

  • The ECB acknowledged that cryptocurrencies have grown in popularity and relevance, and said that the crypto markets are subject to “speculative bouts of volatility.”
  • The increasing use of leverage by crypto investors can lead to “large, concentrated losses,” the central bank said in its bi-yearly financial stability review, which was released on Wednesday.
  • The ECB also warned against the growing link between stablecoins, cryptocurrencies that are pegged to fiat currencies, and the traditional financial market.
  • The central bank has been discussing the creation of a central bank digital currency (CBDC) since the start of this year, and in July said it decided to launch the investigation phase of a digital euro project that would last 24 months.
  • Fabio Panetta, a member of ECB’s executive board, earlier this month laid out a detailed roadmap for CBDC inclusion.

Read more: ECB’s Panetta Says Digital Euro Should Expand Overall Payment Solutions

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Parikshit Mishra
Parikshit Mishra

Parikshit Mishra is CoinDesk's Deputy Managing Editor responsible for breaking news coverage. He does not have any crypto holdings.

Follow @parikshitm899 on Twitter

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.