ECB calls for global regulation of cryptocurrencies, photo freepik

Cryptocurrencies like bitcoin have so far largely escaped regulation, but authorities in numerous countries are taking a closer look given the threat they could pose to financial systems given their volatility and the increasing size of the market.

"We need to make coordinated efforts at the global level to bring crypto-assets into the regulatory purview," said Fabio Panetta, a member of the ECB's executive board, in a speech in New York.

"And we need to ensure that they are subject to standards in line with those applied to the financial system."

His call echoes that of the Bank of England, which last month increased oversight to prevent cryptocurrencies from becoming a risk to financial stability.

Panetta said the crypto market is now larger than the $1.3 trillion (1.21 trillion euros) sub-prime mortgage market was when it melted down and triggered the global financial crisis in 2007.

Moreover, "it shows strikingly similar dynamics", he warned.

"Crypto evangelists promise heaven on earth, using an illusory narrative of ever-rising crypto-asset prices to maintain inflows and thus the momentum fuelling the crypto bubble," said Panetta.

"Crypto-assets are bringing about instability and insecurity –- the exact opposite of what they promised," he added.

Panetta said that growth of cryptocurrencies shows there is public demand for digital assets and instant payment systems, and said the ECB was working to satisfy that demand with the development of a digital euro.