ECB Board member Fabio Panetta has said that cryptocurrencies are a global phenomenon, so a coordinated effort is needed to regulate them.
In a talk at Columbia University, he has stressed that the potential collapse of the crypto sector poses a serious risk to financial stability.
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According to Panetta, the capitalization of digital currencies is approximately 1% of the global value of financial assets, a figure that has already surpassed the size of the US subprime mortgage market, when it was worth $1.3 trillion and triggered a global crisis.
The ECB representative has pointed out that both markets show "strikingly similar dynamics."
For this reason, regulators should respond, as cryptocurrencies, by their nature, "are not backed by any collateral or managed by a trustworthy operator." Panetta has added:
"This makes them purely speculative in nature, and hence highly volatile."
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