Crypto Adoption Is Increasing Rapidly & Regulations Are Must – IMF Research.

According to IMF research, the risks associated with the fast adoption of crypto assets are rapidly expanding, and rather than being restrained, strategies and means to govern them must be established.

European banks, which are already dealing with a potential tsunami of bad loans as a result of the COVID epidemic, may now face a new threat from an unexpected source: the European Central Bank’s ideas for digital investment.

The European Central Bank (ECB), which determines the monetary policy for 340 million people in 19 nations, has vowed to establish a digital euro, which will be “an electronic version of central bank money accessible to all individuals and enterprises,” according to the ECB.

However, bank officials make it clear that the digital euro will be an ECB counterpart in the dramatic rise of crypto assets such as Bitcoin [BTC] and Ethereum [ETH], as well as the explosion of commercial acceptance of fintech services ranging from PayPal to Revolut.

The ECB is investigating the possibility that high technology will control a large portion of European banking pies, weakening the ECB’s grip on the continent’s financial system.

“For us, digital euro is not a choice; it is something we simply have to accomplish,” ECB vice-president Luis de Guindos said in an interview with Portuguese newspaper Publico earlier this month.

The ECB emphasizes that digital currency will coexist with euro bills and coins rather than replace them. As firms recover from epidemic-related closures, the ECB is already facing bad debts of around $ 1.4 trillion ($ 1.7 trillion).

If the ECB introduces digital euros, some experts fear that Europeans will rush to register digital banking accounts, absorbing billions of existing accounts.

Euro offender banks, according to BofA Securities, might face “collateral damage” if the ECB decides to establish a digital currency.

The ECB is far from the only central bank contemplating the use of digital currency. China is leading the way, having handed over $ 30 million in digital currency to 50,000 Beijing citizens and some of the world’s largest central banks in a test initiative last month.

Fabio Panetta, board member of the ECB’s executive committee and digital finance director said “If not correctly structured, a digital euro in times of crisis might increase ‘digital runs’ away from commercial banks towards the central bank.”

According to Panetta, these dangers may be mitigated by adopting a system that allows digital euros to be used for domestic and international payments but not for investment.

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