The European Central Bank (ECB) recently published its third report on financial stability, called the Financial Stability Review (FSR). In the report, the bank again lays out cryptocurrencies such as bitcoin (BTC).
The ECB makes the well-known old comparison and calls the growth of crypto a bubble and a tulip mania. Nevertheless, the bank admits that institutional investors and institutions are also showing increasing interest:
“The surge in bitcoin prices has eclipsed previous financial bubbles such as the 'Tulip Mania' and the 'South Sea Bubble' in the 1600s and 1700s. While this was largely driven by private investors, some institutional investors and non-financial companies are also demonstrating growing interest. ”
The ECB also lashes out at the volatility of the bitcoin price, the CO2 emissions and allegations about illegal practices. We have heard this before from ECB president Christine Lagarde who shouted this kind of fear, uncertainty & doubt (FUD) without any substantiation.
Nevertheless, the bank considers the influence of crypto on financial stability only “limited,” mainly because it is not yet widely used as a means of payment and institutions have little exposure:
“Price volatility makes bitcoin risky and speculative, while its exorbitant carbon footprint and potential use for illegal purposes are cause for concern. Crypto assets are still not widely used for payments, and euro area institutions have little exposure to crypto-related financial instruments, so financial stability risks currently appear limited. ”
Today, the CEO of HSBC, the largest bank in Europe, also lashed out at bitcoin.