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Draghi warns of blockchain risk if euro payment systems fragment
[EDINBURGH] Mario Draghi said the European Central Bank is closely watching blockchain innovation to ensure that its adoption around the euro area doesn't fragment its payment systems.
The ECB president began quarterly testimony to lawmakers in Brussels with comments focused on financial innovation, including the "rapid" development of distributed ledger technologies.
"There is a need to constantly monitor and assess potential new or more pronounced risks resulting from the application of new technology such as DLTs to payment, clearing and settlement infrastructures," Mr Draghi said. "One such possible risk is an increase in market fragmentation, if different DLT approaches were to become firmly established in parallel in different member states."
While the ECB has previously identified such a threat, the remarks suggest a rising level of vigilance as these technologies evolve. The comments also underscore the extent of its activism on matters surrounding market infrastructure as the institution focuses on the potential relocation of euro clearing with the UK's exit from the European Union.
"The Eurosystem oversight framework has to remain effective if we are to discharge our responsibility in this new environment," Mr Draghi said. "The Eurosystem will of course continue to act in accordance with its mandate to promote the smooth operation of payment systems."