Bitcoin is a problem … yes, for banks

Bitcoin is a problem … yes, for banks.

We are lucky enought that social networks exist and there are watchdog people that re-publish what they found over the net. Today we are talking about a document of European Central Bank (ECB) of year 2012 (yes, you read it right, 8 years ago) in which are analyzed the risks of newborn (at the time) cryptocurrencies.

The title of the document is “Virtual Currency Schemes – October 2012” and it is over 50 pages long (Link here), but what has been highlighted by a twitter user is that the European Central Bank is analyzing its own reputation risk, before any risks for prices and citizens!

What ECB says

Reading through the document about its reputational risks, the European Central Bank writes:


How to ECB came to this conclusion? Let’s see what it is written at the end of the document.

Although in practical terms virtual currency schemes are only an evolution, from a conceptual point of view they do present substantial changes when compared to real currencies and payment systems. Firstly, conventional actors like financial institutions, clearing houses and central banks are absent from these schemes. Also, they proliferate more easily, against the background of the huge growth in access to and use of the internet and as a result of the technical innovations behind these schemes. Moreover, they are not often bound to a specific country or currency area, which complicates law making, regulating and law enforcing.

From the preliminary analysis in this report it can be concluded that, in the current situation, virtual currency schemes:

  • do not pose a risk to price stability, provided that money creation continues to stay at a low level;
  • tend to be inherently unstable, but cannot jeopardise financial stability owing to their limited connection with the real economy, their low volume traded and a lack of wide user acceptance;
  • are currently not regulated and are not closely supervised or overseen by any public authority, even though participation in these schemes exposes users to credit, liquidity, operational and legal risks;
  • could represent a challenge for public authorities, given the legal uncertainty surrounding these schemes, as they can be used by criminals, fraudsters and money launderers to perform their illegal activities;
  • could have a negative impact on the reputation of central banks, assuming the use of such systems grows considerably and in the event that an incident attracts press coverage, since the public may perceive the incident as being caused, in part, by a central bank not doing its job properly;
  • do indeed fall within central banks’ responsibility as a result of characteristics shared with payment systems, which give rise to the need for at least an examination of developments and the provision of an initial assessment.

Although these schemes can have positive aspects in terms of financial innovation and the provision of additional payment alternatives for consumers, it is clear that they also entail risks. Owing to the small size of virtual currency schemes, these risks do not affect anyone other than the users of the schemes. However, it can reasonably be expected that the growth of virtual currencies will most likely continue, triggered by several factors:

  1. the growing access to and use of the internet and the growing number of virtual community users,
  2. the increase of electronic commerce and in particular digital goods, which is the ideal platform for virtual currency schemes;
  3. the higher degree of anonymity compared to other electronic payment instruments that can be achieved by paying with virtual currencies;
  4. the lower transaction costs, compared with traditional payment systems; and,
  5. the more direct and faster clearing and settlement of transactions, which is needed and desired in virtual communities.

Given that the current assessment of risks is highly dependent on relatively small-sized virtual currency schemes, the assumption that virtual currency schemes will continue to grow means that a periodical examination of the developments is needed in order to reassess the risks.


Eurotower people, already in 2012, analyzed cryptocurrencies and its report include some interesting conclusions too. But what really strike is that they worried mostly if cryptocurrencies constitute a risk for their power status.

Do you think the report was made exactly for this specific purpose?


Marco Dal Prà is a consultant in the industrial field; for about 20 years was an automation software developer. As a passion he is now following closely the crypto world, with several articles published since 2017.

He regularly helds courses about Bitcoin and Criptocurrencies; for informations or to get in contact follow this   Link.