The European Central Bank is worried about the potential risks for the financial markets from a cap on natural gas prices within the EU, BNR reports.

The bloc has been in intense discussions for several weeks about how to impose a cap on gas prices.

The measure - designed to prevent skyrocketing costs for consumers - is proving controversial for Europe amid a sharp energy crisis following Russia's invasion of Ukraine.

The European Commission proposed in November that the upper limit of gas prices be 275 euros per megawatt hour.

However, several Member States have indicated that this is a rather high threshold and is unlikely to be triggered.

Natural gas in Europe rose nearly 6% this morning

On Friday, Dutch gas hub TTF gas futures ended trading at around €145 per megawatt hour.

Discussions on the cap continue among the 27 EU member states ahead of a meeting of ministers next Tuesday (December 13), with the ECB meanwhile warning that the price cap could have implications for financial markets.

"The ECB recognizes that mechanisms aimed at mitigating price extremes and volatility in wholesale gas markets can in principle mitigate a number of risks to financial stability, including risks during periods of elevated and volatile gas prices in 2022 .” said an ECB document cited by CNBC.

"Nevertheless, the ECB considers that the current design of the proposed market adjustment mechanism may in some circumstances threaten financial stability in the euro area," it added.

The comments are in line with concerns expressed by countries such as Germany and the Netherlands, which have asked for stronger guarantees that the cap will not upset markets.

Supporters of the price cap say the tool will be monitored regularly and could be suspended if regulators, including the European Central Bank, identify any financial problems.

Some hope a price cap decision can be reached at a meeting of EU energy ministers in Brussels, Belgium.

"Hopefully this will be finished at the ministerial level next week. But there are still discussions on the sidelines. We'll see," an official working for the prime minister of the EU's leading country, who did not want to be named due to sensitivity, told CNBC on Thursday of the conversations.

Another official based in Brussels, who also did not want to be named because of his proximity to the talks, said: "Consensus seems quite elusive."

The impasse over the measure underscores how sensitive and technical it is.

Indeed, some energy ministers described the initial proposal to cap prices at €275 per megawatt hour as a "joke".

A number of countries, such as Poland, Greece, Spain and Portugal, wish to introduce a price cap.

These countries are less able to mitigate the impact of the energy crisis on consumers and as a result are pushing for pan-European solutions.

Kostas Skrekas, Greece's environment and energy minister, told CNBC last month that the cap should be below 200 euros per megawatt hour.

″A ceiling of 275 euros is not a price ceiling.

No one can afford to buy gas at this high price for long.

We certainly believe that a price ceiling below €200, between €150 and €200, would be more realistic," he said.

Two European officials confirmed to CNBC that the new proposal currently under discussion is a cap of €220 per megawatt hour.

However, this could change again before the ministers meet on Tuesday.

Under the same proposal, the cap would only be triggered when prices are €58 above the benchmark LNG price for 10 consecutive trading days and European gas prices exceed the price cap for two weeks.

European Union

price of natural gas