Senior European Central Bank (ECB) executive board member Fabio Panetta has criticized digital currencies calling them a “Ponzi scheme”.
The lawmaker claimed they pose many risks to mainstream finances and banking, without offering much in return.
His comments come at an important time for the future of cryptocurrencies in the euro zone and the European Union.
The ECB is planning and working on a digital euro that will try to put digital currencies under its control while attempting to enhance the consumer experience and cut money laundering.
But the ECB’s power is limited to the euro zone and specifically, the creation of a digital euro. It has no influence over private cryptocurrencies, such as bitcoin or ethereum.
Panetta criticized cryptocurrencies further and said that they were speculative and could bring nothing but damage to society.
Their present-day value, Panetta continued, was predicated on the “greed” of people who were hoping that others would keep investing so a person’s original investment would be worth much more than a person who comes last. When the “house of cards” collapses, people will be left buried under their financial losses.
Panetta was adamant that the ECB should not enable investors to repeat another major financial bubble. He reiterated his opinion of crypto resembling a Ponzi scheme, explaining that the value of such an investment could only continue to grow for as long as people believe it would continue to do so.
While Panetta’s arguments ring familiar, the fact that major financial and governmental stakeholders are part of the ecosystem is already some sort of guarantee that it would weather any sudden changes and cataclysms.