ECB chief Mario Draghi believes bitcoin is not a currency mainly due to the fact no central bank backs bitcoin.
Mr Draghi warned “nobody backs” leading cryptocurrency bitcoin as the ECB held its third Youth Dialogue which allows young people to discuss current issues with Europe’s leaders.
From January 17 to 23 young people were given the chance to speak to Mr Draghi via Twitter or Facebook with the hashtag #AskDraghi.
Italo from Italy asked if you were a young university student like me, would you buy some bitcoin and keep it for safety?
Mr Draghi said: “Frankly I would think carefully before investing.” Due to the fact he does not see bitcoin as a currency.
He explained how the euro is backed by the ECB and the dollar is backed by the Federal Reserve and said the hard currencies values are stable.
Mr Draghi said: “Nobody backs the bitcoin.”
“The euro today is a euro tomorrow. Its value is stable.”
Mr Draghi said he does see the benefits of blockchain technology which is behind bitcoin but warned it is “not secure” for central banking.
He said: “It is actually quite promising. It makes certain processes much faster an example would be that an invoice would not need to be settled, it can be done instantly.
“We are very interested in this technology but it still is not secure for central banking. Therefore we need to look through it and investigate it more.”
Asked if the ECB will regulate or ban bitcoin, Mr Draghi said: “It is not the ECB’s responsibility to do that.”
Mr Draghi’s comments come as Citibank, Lloyds, JP Morgan Chase & Co and Bank of America all barred customers from using credit cards issued by them to buy cryptocurrencies.
And the European Banking Authority, European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority have warned cryptocurrencies could “mislead” investors.
A European Commission spokesman said: “The European Commission welcomes the warning issued by the three European Supervisory Authorities (on 12/02) alerting consumers of risks when buying virtual currencies.”
(Additional reporting by Maria Ortega.)