Bitcoin is destined to fail due to its inherently risky nature that exposes investors to threats, said the General Manager of the Bank for International Settlements, Agustin Carstens. The executive, who has portrayed adverse feelings against the primary crypto for years, suggested that only central banks should issue digital currencies.
BIS GM Criticize BTC’s Risky And Volatile Nature
Bitcoin’s parabolic increase that took the asset from about $10,000 in early October 2020 to an all-time high of $42,000 in January 2021 and the subsequent sharp retracement towards $30,000 caught the attention of representatives of the traditional financial space.
While some praised the cryptocurrency for its gains, others warned of reaching a potentially bubbly territory and envisioned further corrections. Somewhat expectedly, the head of BIS entered the second camp. During a recent speech for the Hoover Institution, the long-term BTC critique took another stab at the first-ever cryptocurrency and its volatility.
Furthermore, the GM of the Basel, Switzerland-based institution, warned investors that they should be wary of potentially losing everything if they bet on the BTC horse.
“Investors must be cognizant that Bitcoin may well break down altogether.”
Previously, Carstens had questioned BTC’s efficiency and legality. He also advised the younger generations, which tend to be affectionate to bitcoin, to “stop trying to create money,” and, as most doubters, said that the cryptocurrency is a Ponzi scheme.
Agustin Carstens. Source: WSJ
Digital Currencies Are Central Banks’ Responsibility
Carstens used to be against all types of digital money, but he showed the first signs of a changed mind in 2019 when he said that virtual currencies could succeed and have value in certain conditions.
Being the head of the so-called bank for central banks, Carstens believes that precisely such organizations have to be responsible for developing, releasing, regulating, and managing digital currencies. He doubled-down on this narrative during the recent speech as well.
“Sound money is central to our market economy, and it is central banks that are uniquely placed to provide this. If digital currencies are needed, central banks should be the ones to issue them.”
He also admitted that BIS had established a designated team to research and trial digital currencies. The organization urged central banks to enhance their CBDC developments in 2020 as the COVID-19 pandemic highlighted the potential risks associated with paper money and physical transactions.