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ECB working to identify digital currency risks for financial institutions: Draghi

European banks are showing limited appetite for digital currencies such as bitcoin, the European Central Bank President said recently.

Speaking at a European Parliament meeting this week, Mario Draghi said:

“Let me first say that we are not observing a systemically relevant holding of digital currencies by supervised institutions – by banks, in other words. Actually, the credit institutions established in the European Union are showing a limited appetite for digital currencies like Bitcoin, notwithstanding the high level of public interest.”

Draghi further noted the recent global developments in the bitcoin space, particularly the listing of Bitcoin futures contracts by US exchanges. He said that such developments could lead European banks too to hold positions in Bitcoin, adding “we will certainly look at that.”

Emphasizing that bitcoin and other digital currencies are very risky assets, he cautioned banks to measure measure the risk of any holdings of digital currencies in their portfolio accordingly.

“Right now, digital currencies are not subject to a specific supervisory approach,” Draghi added. “Work is under way in the Single Supervisory Mechanism to identify potential prudential risks that these digital assets could pose to supervised institutions.

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