For the European Central Bank, while the collapse of the cryptocurrency platform “is not a surprise”, the “speed” of the fall is striking.
The recent spectacular bankruptcy of the FTX cryptocurrency platform is not at this stage likely to spread to the financial markets, but this opaque and volatile sector must be closely watched, a senior official of the European Central Bank (ECB) warned on Wednesday. . The American FTX was still considered at the beginning of November as the second cryptocurrency platform in the world, before collapsing like a house of cards in a few days.
Its collapseis no surprise” but the “speedof the fall is striking, ECB Vice-President Luis de Guindos said during a conference call on the sidelines of the presentation of a semi-annual report on financial stability. If some analysts are already drawing a parallel with the fall of Lehman Brothers, the Wall Street giant whose bankruptcy in 2008 amplified the financial crisis, “my impressions are that (the aftermath of the FTX bankruptcy) is confined to the cryptocurrency spaceadded Luis de Guindos. “So far, this has not had any implications in terms of financial stability for the broader financial markets.“, he underlined.
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There are, however, channels that he describes as “obscurebetween the cryptocurrency space and the rest of the financial market, leading central banks to “examine carefully» these risks. The nearly 130-page thick ECB Financial Stability Report is silent on the risks of crypto-assets except to mention that they are “the dominant payment method in response to cyberattacks“. More generally, the central bank of the euro zone underlines the worsening, since the last report in May, of the risks for the stability to which the households, companies and governments are exposed, against the backdrop of a gloomy economic outlook and record inflation.
“Eurozone households and businesses are already feeling the effects of higher inflation and weaker economic activity, amid the lingering energy crisis caused by the war in Ukraine“, notes in the preamble Luis de Guindos. Rising energy costs could thus increase the number of defaults, especially for energy-intensive SMEs and households if these players have difficulty repaying their loans. Banks could suffer an increase in credit losses in the medium term, warns the monetary institute. States are showing high levels of public debt following the Covid-19 pandemic while financing conditions are becoming stricter.
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