The head of the Bank for International Settlements (BIS), the central bank of Central banks, on Tuesday called bitcoin a speculative bubble and called on the authorities to act to protect confidence in the financial system.
Bitcoin developers are actively pursuing their goal of creating an alternative payment system without government involvement. However, for Agustin Carstens, managing director of the BIS, the cryptocurrency “is at the same time a bubble, a Ponzi scheme and an environmental disaster. ” Comments he made during a conference in Frankfurt.
Carstens urged the authorities to be vigilant because cryptocurrencies can undermine public confidence in the financial system. Like bitcoin, crypto-currencies are actually “purely speculative” assets with “very volatile”, valuations, recalled the central banker.
Crypto-currencies benefited last year from the leniency of the authorities. Their value soared. However, given the melting of the value of bitcoin – the king of virtual currencies – from a peak of nearly $ 20,000 in December to less than 7,000 in recent days, authorities have become more critical. China, for example, plans to strengthen its control of cryptocurrencies and a blow very hard to the transactions in the country.
According to Carstens, the volatility of crypto-currencies undermines their usefulness for transactions and as a unit of value, while it opens a boulevard to criminals to launder dirty money.
“If the only” business model “is the use for illicit or illegal transactions, central banks can not allow these tokens to rely on the same infrastructure that serves the overall financial system and on the trust that it provides,” warned Mr. Carstens. That is why, in his opinion, central banks must “be ready to intervene if necessary”.