• Agustin Carstens, the head of the Bank for International Settlements (BIS), believes that cryptocurrencies have lost the battle against fiat currencies issued by central banks.
• Carstens argued that stablecoins are not reliable due to their lack of „institutional arrangements and social conventions.“
• The BIS general manager stated that stablecoins rely on the credibility of fiat with fewer regulatory protections and cannot ensure the unity of money.
Agustin Carstens on Cryptocurrencies
Agustin Carstens, the general manager of the Bank for International Settlements (BIS), has recently spoken out about cryptocurrencies and their comparison to fiat currencies. According to Carstens, cryptocurrencies have lost the „battle“ against fiat currencies issued by world’s central banks. He claimed that stablecoins are not reliable because they lack the necessary „institutional arrangements and social conventions“ needed for them to function properly as a form of currency.
Stablecoins Do Not Benefit from Regulations
Carstens noted that technology alone does not make for „trusted money“. He also pointed out in his speech at the Monetary Authority of Singapore that there will always be different visions for what a future monetary system should look like, but he disagrees with some cryptocurrency proponents who believe stablecoins will be the future of money. He believes these proponents forget what sustains fiat currencies and insisted that it is only through legal, historical infrastructure behind central banks can give great credibility to money.
Stablecoins Cannot Guarantee Singleness of Money
Carstens continued by noting how events from this past year have raised serious concerns about whether or not stablecoins can actually function as money. He explained how these tokens rely on the credibility of fiat currency but with fewer regulatory protections which means they cannot guarantee singleness of money or lender-of-last-resort support.
Central Bank Digital Currencies May Be More Reliable
The BIS general manager suggested that perhaps central bank digital currencies may be more reliable than other forms such as stablecoins due to having more robust institutional backing systems in place to support them. This would provide greater assurance in terms of ensuring singleness across multiple digital assets and providing lender-of-last resort support if necessary.
Overall, Agustin Carstens‘ opinion on cryptocurrencies is clear – while technology may play a role in providing an alternative vision for a monetary system, it cannot replace legal and historical infrastructure provided by central banks which give greater reliability and trustworthiness to money itself. Stablecoins do not benefit from this type of institutional backing or protection making them less reliable compared to other forms such as central bank digital currencies.
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