European System of Central Banks [ESCB] confirms exploring crypto-assets and stablecoins to further financial innovation
The European Central Bank confirmed earlier today that the European System of Central Banks [ECSB] is looking to explore new technologies and innovations to improve the financial sector, something which is in line with their mandate.
The letter was addressed to Ms. Eva Kaili, a Greek politician and a member of the European parliament, popular for her support towards cryptocurrencies in Europe. Additionally, the letter said,
“In this regard, the ESCB is analysing crypto-assets and stablecoins with a view to understanding their potential implications for monetary policy, the safety and efficiency of payments and market infrastructures, and the stability of the financial system”
However, the letter also stated that although stablecoins “have had limited implications in these areas,” this might change in the future, given the “rapid pace of technological advancement.” It also added that this might change in the future, illustrating the example of Libra and cryptocurrencies like it, which might have a potential for widespread adoption for both retail and wholesale payment.
Focusing more on cross-border payments, which is a $2.9 trillion industry, the letter noted that “stablecoin arrangements are largely untested and give rise to a host of risks and issues, including those related to monetary policy transmission, financial stability, and the smooth functioning of the global payment system,” among others.
In conclusion, the ECSB is said to be taking a step towards making digital Euro available to the general public, while considering domestic requirements and global developments.