Addressing the European Parliament in Brussels, Mario Draghi warned of the risks associated with applying the technology to infrastructures including clearing and settlement.
“Given the rapid pace of development in this field, 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 in particular,” he 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.
“Moreover, the Eurosystem oversight framework has to remain effective if we are to discharge our responsibility in this new environment.”
A swathe of new developments has seen the potential of blockchain return to the industry’s agenda.
Last week, blockchain consortium R3 secured $107 million in a fundraising round from 40 major institutions.
The funding round represents the largest blockchain investment to date and included institutions such as Barclays, Bank of America Merrill Lynch, HSBC, BNY Mellon, Citi, BNP Paribas and Deutsche Bank.
Other industry participants have also cast doubt on issues linked with the technology.
During a panel discussion in London earlier this year, Justin Chapman, global head of market advocacy and innovation research at Northern Trust suggested legal costs and complexities were hampering further deployments.
ECB president Draghi also stressed the importance of non-banks managing the risks of FinTech developments.
“The increasing relevance of non-banks and digital innovation in the provision of financial services may also harbour new risks.
“It is, for instance, essential to assess and adapt the prudential framework to cater for the increased role of non-banks and financial innovation, ensure the existence of a level playing field for both new and existing players and provide supervisors with adequate tools to address new risks,” said Draghi.
ECB president Draghi also stressed the importance of non-banks managing the risks of FinTech developments.
“The increasing relevance of non-banks and digital innovation in the provision of financial services may also harbour new risks.
“It is, for instance, essential to assess and adapt the prudential framework to cater for the increased role of non-banks and financial innovation, ensure the existence of a level playing field for both new and existing players and provide supervisors with adequate tools to address new risks,” said Draghi.