Bank of International Settlements Manager Advises Against Central Bank-Backed Coins
It would seem that Agustin Carstens is still not a fan of cryptocurrencies as he stated during a March 22, 2019 speech at the Central Bank of Ireland that the issuance of central bank-backed tokens could destabilize the economy.
While some might welcome such a development, not everyone is in support. Such critics, like Agustin Carstens, general manager at the Bank for International Settlements (BIS), has been very vocal about his discontent with the industry at large.
In a report published March 22, 2019, Carstens once again makes his views known, but this time about central bank-issued cryptocurrencies and why he thinks they are a terrible idea.
Not a Fan
This is not the first time that the BIS manager has shared an anti-crypto sentiment. In the past, he referred to bitcoin as “a bubble, a Ponzi scheme, and an environmental disaster.”
His most recent comments came during a March 22, 2019 speech at the Central Bank of Ireland in Dublin where he said that the idea of central bank-issued tokens is a symptom of financial panic. The consequences of this, he says, would be that people would shift their funds from commercial banks to the tokens and this would undermine the entire financial system.
Besides this, Carstens also cited that such tokens would inevitably change the way that the interest rate set by central banks would affect consumers’ demand for money and would, in turn, would lead to larger central bank balance sheets and an eventual build-up of assets which will affect the financial market liquidity.
“There are huge operational consequences for central banks in implementing monetary policy and implications for the stability of the financial system,” Carstens said.
“Central banks do not put a brake on innovations just for the sake of it. But neither should they speed ahead disregarding all traffic conditions.”
A Possible Change of Heart?
Carstens is hardly the only powerful figure in the finance world that is not enthusiastic towards crypto. A European Central Bank executive once referred to bitcoin as the evil spawn of the financial crisis.
However, a change of mind is not completely far fetched. After all, the management of JP Morgan has been praying for Bitcoin’s demise until eventually launching JPM Coin.