“Crypto assets are a niche phenomenon”
Even though demand for digital forms of payment is growing, crypto-assets remain a niche phenomenon in the euro area, not least because of their high volatility. At a Frankfurt Luncheon on August 22, 2025, Prof. Dr. Fritzi Köhler-Geib, Member of the Executive Board of the Deutsche Bundesbank, spoke on “Crypto-assets – An alternative to a stable currency?” After the event, she was available for an interview.
Atlantik-Brücke: Ms. Köhler-Geib, you believe that crypto assets are not an alternative to a stable currency, even though their importance is growing. Could you explain what led you to this assessment?
Köhler-Geib: I look at crypto assets primarily from an IT, risk control, and research perspective. As things stand today, crypto assets are still a niche phenomenon in payment transactions. For example, Bitcoin’s blockchain currently processes an average of 450,000 transactions worldwide every day. This is due to a technical limitation. By comparison, in 2023, an average of 19 million transfers were made every day in conventional payment transactions in Germany alone. Among other things, this shows that Bitcoin, like many other crypto assets, does not fulfill the basic functions of money. Instead, they are primarily used as investment or speculation objects. Their value depends largely on market sentiment, which is why they are very volatile.
Stablecoins are backed by real assets. They were introduced to reduce the problem of sharp fluctuations in value. However, stablecoins are currently rarely used in payment transactions. The reasons for this are the comparatively high transaction costs and the still limited acceptance of crypto assets as a means of payment. Possible applications arise in particular in the area of cross-border payments. Here, the costs of conventional payment transactions are still relatively high compared to domestic payments.
What specific risks do you see?
Crypto-assets can affect financial stability and monetary policy transmission. However, we currently consider the systemic risks to be limited, as the crypto markets are still relatively small and not very interconnected with the conventional financial system. However, the reserve holdings of the assets underlying stablecoins already represent a link between the crypto system and the conventional financial system. Stablecoin issuers hold these reserve holdings in order to keep the value of stablecoins as stable as possible. However, stablecoins remain subject to liquidity and credit risks.
In the event of so-called runs – i.e., when many users sell their stablecoins at the same time – contagion effects can occur. The majority of global stablecoin reserves are currently invested in short-term US government bonds, which is increasingly making individual issuers significant players in this market.
Since Donald Trump took office, the US has seen a deregulation of the previously relatively strict regulatory framework for crypto assets. Among other things, Trump wants to push ahead with the establishment of a strategic cryptocurrency reserve. How can we deal with this in Europe?
In order to identify systemic risks at an early stage, we must closely monitor the crypto markets and their interdependence with the conventional financial system. 2022 showed that even stablecoins can collapse. At that time, a loss of confidence triggered a sell-off that caused the algorithmically controlled stablecoin “TerraUSD” to collapse, costing investors billions. But even stablecoins with backed reserves are not risk-free. In March 2023, for example, the stablecoin “USDC” temporarily lost its peg to the US dollar because part of its reserve holdings were held at the insolvent Silicon Valley Bank. The EU Markets in Crypto-Assets Regulation (MiCAR) makes a significant contribution to limiting the effects on the conventional financial system.
At the Bundesbank, we are also intensifying our research on the future of finance in order to gain a better understanding of how the continued growth of global crypto markets affects financial stability and monetary policy transmission. It is also very relevant that we in the Eurosystem are working on digital central bank money – in both wholesale and retail variants – in order to continue to meet the needs of the population and banks for digital means of payment with secure government money in the future.