In an interview with Bloomberg, Yves Mersch, Member of the Executive Board of the ECB gave expression to the concerns being aired in central bank meetings the world over: "If you increasingly have bridges between the virtual world and the real world and then there is a collapse in this virtual world, it could drain liquidity from the real world. This then becomes a concern for the central bank."

Mersch's observations come just days after the new head of the Bank for International Settlements waded in with a scathing attack on cyrptocurrencies, deriding bitcoin as a "ponzi scheme and environmental disaster" and calling on central banks to take action to prevent the spread of "parasite" currencies.

He is not alone in his views. Says Mersch: "The General Manager of the BIS is usually also reflecting the views that are expressed around the table when central bankers come together. You won't be surprised to know that we at the ECB are fully in line with his views and we have similar worries, or similar endeavours we are working on."

Increasing public interest in cryptocurrency investments has driven the issue higher up the agenda for policy markers, who are worried that the social and psychological cues picked up from virtual currency trading could bleed into the public perspective of public tender.

"As long as it was negligible it was not considered a priority, but since this hype accelerated at the end of last year it has moved higher up on the agenda," says Mersch. "If you see how fast something can develop, it can very quickly reach dimensions of past bubbles that also had negative effects on the economy. That we cannot ignore."

Given the state-less nature of cryptocurrency markets, Mersch believes that a global, harmonised response is in order, with the topic expected to feature prominently at the forthcoming G20 meeting in Argentina.

However, the formulation of rational policy is likely to be challenging in the absence of hard empirical data with which to back up assertions, he says. "We need more information and that's why for me one obligation would already be to force the unregulated platforms to report transactions in a harmonized way to repositories so that we would have access to information also in order to create a better response."

So far, most regulated financial institutions have refrained from getting involved in the virtual markets.

"Yet there are signs that greed has weakened their resolve and some have begun to form tentative linkages," notes Mersch. "A number of derivative products pertaining to VCs have recently been launched. There is rising activity in euro at VC exchanges and some jurisdictions are falling over each other to issue licences to largely unregulated platforms and exchanges in a misplaced competitive race."

The risks of contagion and contamination of the existing financial system from a pricking of the cryptocurrency bubble is a genuine concern.

"In my view, it should be examined whether any VC activity carried out by FMIs must be ring-fenced from their other activities," says Mersch. "The enforcement of segregated accounts and liabilities could be discussed. FMIs play an important role in financial markets, and any liquidity support offered by central banks should be to mitigate shocks emanating from the real economy, not from gambling in risky assets."