According to Agustín Carstens, head of the Bank for International Settlements (BIS), cryptocurrencies have lost the “battle” against fiat currencies issued by the world’s central banks. Speaking at the Monetary Authority of Singapore on Wednesday, Carstens stressed that stablecoins are unreliable because they lack the “institutional arrangements and social conventions behind them.”
Agustín Carstens insists that cryptocurrencies lost the ‘battle’ against fiat currencies
Agustín 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 Director General of the BIS said Bloomberg that the battle between fiat and crypto assets “has been won.” Carstens insisted that technology alone does not make “reliable money.” The BIS general manager added:
Only the legal and historical infrastructure behind central banks can give money great credibility.
‘Stablecoins cannot guarantee the uniqueness of money’
Carstens made similar statements during a speech at the Monetary Authority of Singapore, using stablecoins as an example. He said that there will always be “alternative visions of what a future monetary system and digital money could look like,” adding that some cryptocurrency proponents believe that stablecoins will be the future of money. The BIS CEO disagrees because he believes these advocates are forgetting what underpins fiat currencies.
“What this view forgets is that what underpins fiat money is not the application of novel technologies but all the institutional arrangements and social conventions behind it,” Carstens said. “And it is precisely these arrangements and conventions that make money reliable 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 currency with fewer regulatory protections, which means they cannot guarantee the unity of money. “(Stablecoins) are not settled in central bank money or enjoy lender of last resort support,” Carstens said. “Consequently, they cannot guarantee the uniqueness of the money.” Carstens believes that central bank digital currencies, on the other hand, could “provide safe and stable money.”
Carstens concluded that it is important that current financial incumbents, specifically central banks, 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 uniqueness of money.”
Do you agree with Agustín Carstens’ view that stablecoins cannot guarantee the uniqueness of money and that central bank digital currencies are the way forward for safe and stable money? Share your thoughts from him in the comments section below.
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