According to Agustin Carstens, the head of the Bank for International Settlements (BIS), cryptocurrencies have lost the “battle” against fiat currencies issued by the world’s central banks. Speaking to the Monetary Authority of Singapore on Wednesday, Carstens stressed that stablecoins are not reliable because they lack “institutional arrangements and social conventions behind them.”
Agustin Carstens insists that cryptocurrencies lost the “battle” against fiat currencies
Agustin Carstens, general manager of the Bank for International Settlements (BIS), believes that cryptocurrencies have lost the battle against national currencies such as the euro, pound and yen. Carstens gave a speech at the Monetary Authority of Singapore and was also interviewed by Bloomberg News. The BIS chief told Bloomberg that the battle between fiat and crypto assets “has been won.” Carstens insisted that technology alone does not provide “reliable money”. BIS GM added:
Only the legal, historical infrastructure behind central banks can give great credibility to money.
‘Stablecoins cannot guarantee that money is easy’
Carstens made similar statements during a speech at the Monetary Authority of Singapore, using stablecoins as an example. He said there will always be “alternative visions of what a future monetary system and digital money might look like” and added that some cryptocurrency advocates believe stablecoins will be the future of money. The BIS managing director wholeheartedly disagrees because he believes these advocates are forgetting what sustains fiat currencies.
“What this view forgets is that what sustains fiat money is not the use of new technologies, but all the institutional arrangements and social conventions behind it,” Carstens said. “And it is precisely these arrangements and conventions that make money trustworthy to the public.”
Carstens detailed that the events of the past year have raised serious concerns about whether stablecoins can function as money. He noted that stablecoins rely on the credibility of fiat with fewer regulatory protections, meaning they cannot ensure unity of money. “[Stablecoins] don’t settle for central bank money or enjoy lender-of-last-resort support, Carstens said. “That’s why they can’t guarantee that money is easy.” Carstens believes that the central bank’s digital currencies, on the other hand, can “provide safe and stable money”.
Carstens concluded that it is important for today’s financial players, specifically central banks, to contribute to this type of innovation. “If central banks don’t innovate, others will step in,” Carstens warned. “In the meantime, we must ensure that stablecoins do not harm investors and consumers, or contribute to a fragmentation of the monetary system that undermines the simplicity of money.”
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Do you agree with Agustin Carsten’s view that stablecoins cannot guarantee the simplicity of money, and that central banks’ digital currencies are the way forward for safe and stable money? Share your thoughts in the comments section below.
Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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