The plunge in the cryptocurrency market seen at the beginning of 2018 points to a “fading fad”, an executive board member of the European Central Bank (ECB) said recently.

Speaking at the International Center for Monetary and Banking Studies, Geneva, Yves Mersch said:

“The subsequent [cryptocurrency] market plunge rather points to a fading fad. From December to February the price of bitcoin, the top dog among VCs [virtual currencies], fell from almost USD 20,000 to below USD 7,000.”

Mersch said that cryptocurrencies do not appear to pose significant financial stability risks at the moment. Substantiating this with facts, he noted that there are around 200,000 bitcoin transactions globally per day, compared with 330 million retail payments in the euro area.

He said that virtual currencies fail all the three key functions of money – a medium of exchange, a unit of account, and a store of value.

“Do VCs herald a new world of money? No, virtual currencies are a misnomer in the first place. They are not money, nor will they become money in the foreseeable future,” Mersch said.

However, he called upon authorities to closely watch this space to mitigate any potential risks stemming from a growing cryptocurrency market.

“We have to be mindful not to have the complex and interlinked financial system contaminated by immature technologies or shallow business models. Interfaces and gatekeepers require particular scrutiny,” Mersch added.

BTC/USD is currently trading lower on Tuesday at 8185 levels at the time of writing (Bitstamp).