BIS chief says Bitcoin is threat to central banks

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.