The European Central Bank (ECB) has warned of extreme volatility in markets, including digital currencies.
ECB warns regulators not to keep up with stablecoins. According to the central bank, the mushrooming growth of fiat-backed crypto requires an urgent regulatory framework for these assets.
The bank is concerned about the impact stablecoins will have on traditional markets.
The ECB states that crypto assets remain vulnerable to excessive volatility. The bank warned that leveraged transactions could also cause significant losses.
ECB chief Christine Lagarde stated in September that stablecoins are an asset, not a currency. Lagarde also stressed that such currencies should be fully backed by the underlying fiat currency.
“Stablecoins behave like a currency, but in essence it is completely related to a real currency”
The bank stated that global monetary easing has also led to an increase in risky investment practices. Eurozone inflation climbed to 4.1% last month, surpassing the 2% target.
