The European Central Bank (ECB) has released a new report saying the organization plans to use more intranet data to better monitor cryptocurrencies.
A report entitled “Understanding the phenomenon of crypto assets, its risks and measurement problems” shows that the ECB has already created a system that uses “high-quality” aggregated data available online. Thus, the organization tries to analyze the “crypto asset phenomenon” to determine and track how financial technology can affect monetary policy and assess the risks that it can pose to market infrastructure, payments, and financial stability.
However, the use of available data in this way carries certain limitations in terms of its value. The report explains that this data leaves “gaps”, such as possible risks that crypto assets and payment services that use multi-level protocols carry for financial institutions.
The document, among other things, refers to the risks that derivatives and means of investing in digital assets carry, as well as payment cryptocurrency platforms that may have certain consequences for financial policy and stability. Despite the fact that such situations are currently “held back or controlled” when it comes to regulated financial firms, they “can develop and grow over time.” The report says:
“In particular, it is difficult to obtain publicly available data on segments of the crypto-asset market that remain outside the field of view of government bodies. Some relatively illiquid trading platforms may be affected by trading and there is no consistency in the methodology and agreements used by institutionalized exchanges and commercial data providers. Moreover, new and unexpected data needs may well arise with the further development of crypto assets and related innovations. ”
In the future, the ECB plans to delve into the details of the analysis of crypto assets and “continue to work on indicators and data, dealing with the complexity and growing problems that arise when analyzing intranet transactions and multi-level protocols.” The organization will also look for new data sources to obtain information on the links between crypto assets and regulated firms.
Regarding off-line transactions, the ECB said it will work to increase the “availability and transparency” of the data and methods used to aggregate them, as well as “harmonize and enrich metadata and develop best practices for understanding crypto assets”.
In July, the ECB announced that it did not consider bitcoin as a reserve currency. In addition, ECB board member Benoit Coeure noted that regulators in various countries need to prepare for the invasion of companies such as Facebook in the financial sector.