Deutsche Bundesbank (Centralbank) warns of stability risk from Bitcoin bubble. "In the medium and longer term, such bubbles can jeopardize financial stability."
The speculative fever surrounding Bitcoin and other crypto currencies could jeopardize the stability of the financial markets in the medium term. The Federal Banking Board member Andreas Dombret, who is responsible for risk control, warns against such a development in a Focus (German Newspaper) interview. "I'm not worried about the short-term perspective," said Dombret. "In the medium and longer term, such bubbles can jeopardize financial stability. Especially if in the financial market derivatives on cryptocurrencies should play an increasingly important role. Because they act like a lever, they can increase the violent up and down movements even more exponentially. "
Nevertheless, Dombret expects the importance of electronic payment systems to grow significantly in the near future. "The very speculative situation should not obscure the fact that in future we will be dealing much more with digital products in payment transactions," says the Federal Banker. "We're increasingly expecting app-based payments that can be processed in real time in the future."
This is also a key issue for central banks such as the Bundesbank. For this reason, the Eurosystem supports, for example, instant payment - ie a real-time transfer, which is processed from account to account within seconds. "It's not just us, the entire financial sector has an interest in making new currencies and payment systems stable and secure," said Dombret.
The bank overseer also does not exclude the inclusion of Bitcoin and other cryptocurrencies in the balance sheet of banks. "As a bank supervisor, I'm interested in whether an institution can handle the risks it is taking," he said on the Focus question. "The prudential rules oblige credit institutions to adequately underlay all risks with own funds. Of course that would apply to bitcoins as risky assets. "