DIRECTOR OF THE AUSTRIAN CENTRAL BANK: A GROSS FALL OF BITCOIN COULD REQUIRE ECB INTERVENTION

While the price of Bitcoin is approaching $ 10,000, the director of the Austrian central bank believes that a downward spiral could affect the "real economy", and require the intervention of central banks.

Bitcoin is already trading in excess of $ 10,000 in Korea, and may soon reach that price on most global trading platforms. A sharp drop in the price of this asset, whose total capitalization now exceeds $ 165 billion, could have serious consequences for the "real economy", causing a panic that would compel central banks to act.

"Bitcoin could easily explode"

It should be known that the value of all Bitcoins is currently only a fraction of the central banks' gold reserves, which represent about $ 7.5 trillion. But the situation could change if the rise in the value of digital money continues at a rate as steady as this year - its price has already increased by nearly 1000% since the beginning of 2017.

Ewald NowotnyFor Ewald Nowotny, the governor of the Austrian National Bank (OeNB), Bitcoin involves many risks:
"The problem with Bitcoin is that it could easily explode, and the central banks would then be accused of doing nothing."

"Therefore, we are trying to find out whether banking activities related to 'cryptocurrency' trading should be better regulated."

Mr Nowotny had already expressed hostile feelings about Bitcoin, explaining that the rise of the digital currency was a speculative bubble, similar to that of 17th-century tulipomania.

The BTC / EUR pair concerns only 3% of trading volumes involving Bitcoin

For the moment, the regulatory framework that prevails in Europe allows citizens to buy and sell cryptocurrencies easily. Euros are thus dumped daily, in limited but regular volumes, to various digital assets.

If the ECB controls the money supply, it can not do anything against Bitcoin - unless it imposes stricter compliance procedures for European trading platforms, which are already subject to a regulatory framework restrictive.

It should be noted that the exchanges between the euro and Bitcoin involve extremely small volumes - the European currency is only less than 3% of the amounts exchanged, well below the volumes brought by the US dollar, the yen Japanese or the Korean won.

As other analysts have already pointed out, trade involving Bitcoin is still extremely small when compared to those in the forex markets.

It is not surprising to hear Mario Draghi, President of the ECB, declare that digital currencies were not, for the moment, "likely to pose a threat to central banks." The man left, however, to hear that the situation could change in the years to come.

Many central banks have been fiercely attacking Bitcoin, particularly in China. The most recent ban on Bitcoin as a method of payment comes from Morocco.

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