BIS chief says Bit­coin is threat to cen­tral banks

The Pak Banker - - FRONT PAGE - -REUTERS

FRANK­FURT: The head of the Bank for In­ter­na­tional Set­tle­ments (BIS) has blasted bit­coin as "a com­bi­na­tion of a bub­ble, a Ponzi scheme" and, due to the en­ergy con­sump­tion re­quired for min­ing it, an "en­vi­ron­men­tal dis­as­ter". Call­ing for more reg­u­la­tion in a speech to­day, Agustin Carstens, gen­eral man­ager of the BIS, warned that cryp­tocur­ren­cies could be­come "par­a­sites" on the fi­nan­cial sys­tem and ar­gued that they must be held to the same stan­dards as other bank­ing and pay­ment ser­vices, Reuters states.

Forbes fur­ther cites Carstens as say­ing that cryp­tocur­ren­cies should not be al­lowed to un­der­mine trust in cen­tral banks. He ar­gued that the con­se­quences of de­bas­ing this trust have his­tor­i­cally been detri­men­tal, ref­er­enc­ing the 19th cen­tury pro­duc­tion of cur­ren­cies by pri­vate banks as a cause of fi­nan­cial tur­moil that sub­se­quently brought about the cre­ation of the Fed­eral Re­serve Sys­tem.

"The tried, trusted and re­silient mod­ern way to pro­vide con­fi­dence in pub­lic money is the in­de­pen­dent cen­tral bank," Carstens stated, while laud­ing the pro­tec­tions banks af­ford con­sumers and in­vestors.

He also claimed that cryp­tocur­ren­cies are "not sus­tain­able as money," adding that they fail to meet the "ba­sic text­book def­i­ni­tion" of a cur­rency. The volatil­ity of cryp­tocur­ren­cies, the BIS chief went on, is tol­er­ated mostly by those "who mas­sively evade taxes or laun­der money."

Carstens' re­marks put him in the com­pany of a grow­ing list of heads of state and in­flu­en­tial fi­nance fig­ures con­demn­ing bit­coin and other cryp­tocur­ren­cies, which have re­cently suf­fered sub­stan­tial losses in value. Bil­lion­aire George Soros made sim­i­lar as­ser­tions last month, say­ing that the term "cryp­tocur­rency" is a mis­nomer, be­cause a lack of sta­ble value pre­cludes it from be­ing a cur­rency at all.

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