Speaking at the official monetary financial institutions forum in London on Thursday, the European Central Bank executive board member said: “Virtual currencies are not money, nor will they be for the foreseeable future.”

He described digital currencies as a “classic Keynesian beauty contest, where investors buy what they perceive others view as the most attractive investment.”

“Like in Mr Ponzi’s schemes, those investors hope for future price gains and believe they will find a greater fool to sell to before the inevitable crash. Under these conditions, VCs exhibit wild fluctuations in value, meaning that they cannot be trusted as a store of value.”

He further warned that, as mainstream financial institutions become more interested in the assets, the risk of contagion is growing.

Mersch’s dismissive words contrast with the enthusiasm of Luxembourg finance minister Pierre Gramegna who, during a visit to Hong Kong in January, said that cryptocurrencies were here to stay and could be regulated on a European level.

Luxembourg, meanwhile, hosts two cryptocurrency exchange platforms: Bitflyer and Bitstamp.