Bank for International Settlements

Bank For International Settlements (BIS) Criticizes Cryptocurrency Again

The head of the Bank for International Settlements (BIS) continued the institution’s critical stance on cryptocurrency, saying it “cannot take over the functions of money,” BIS reported on July 4th.

Bank for International Settlements (BIS) general manager stated cryptocurrency “are not a good means of payment”

In statements to the Swiss daily Basler Zeitung last week, later published by the BIS, general manager Agustin Carstens warned the “young people” against “trying to make money,” referring mostly to the Bitcoin (BTC) mining industry.

Those who have the greatest incentive in the system of this so-called cryptocurrency are those who produce the assets – the miners. This incentive, however, is not compatible with maximizing the utility of money. he told the publication. Cryptocurrency does not serve any of the three purposes of money. They are not a good means of payment or a good unit of account, nor are they suitable as a deposit of value. They fail dramatically in each of these counts.

Agustin Carstens, general manager of BIS

This is not the first time BIS position itself against cryptos

The BIS caused outrage when it published an article on cryptocurrency in June, and the significant media widely reported its highly suspicious view of the phenomenon against the fiat currency. Along with identical concerns about its potential to function as “fiat money,” the article also feared that the massive adoption of cryptocurrency could “stop the Internet” and other controversial claims.

Continuing the story, Carstens, who in turn has on multiple occasions presented himself as against cryptocurrency, said that it would unequivocally not have a “happy ending.”

“You don’t have to beat around the bush like that. It should not be forgotten that central banks have been providing electronic means of payment for decades,” stated Agustin Carstens, general manager Bank for International Settlements (BIS).

Anna Galvez

The Bank for International Settlements (BIS) believes that cryptocurrencies are not yet ready to come to the forefront for logistical reasons because they do not yet have the characteristics to be a reliable means of payment. If cryptocurrencies were used with the same intensity as fiat money as a means of payment, mobile phones, computers and even the Internet could collapse.

In a large article within its annual economic report, the BIS states that Bitcoin and other such cryptocurrencies suffer from “a number of shortcomings” that would prevent the crypto coins from meeting the ambitious expectations they have generated. However, the BIS recognizes that there is a strong interest in these digital assets, the capitalization of which has soared in percentage terms in recent years.

The Bank for International Settlements (BIS) is an 88-year-old institution based in Basel, Switzerland, which serves as a central bank for other central banks. This prestigious institution believes that cryptocurrencies are too unstable, consumes too much electricity and are subject to too much speculation to ever serve as a reliable means of payment in the global economy.

Also, BIS has identified the decentralized nature of cryptocurrencies as a fundamental disadvantage and not as a key strength, because this type of operation would create logistical problems if crypto coins were to be extended as a method of payment.

Cryptocurrencies will be an environmental problem, Bank for International Settlements thinks

The BIS has analyzed what would happen to the blockchain software if it were to reach the size that traditional payment systems in each country currently handle. Accordingly, Bank for International Settlements believes the cryptos would eventually overwhelm everything from smartphones to servers.

But the problem goes far beyond storage capacity, and extends to processing capacity, as only supercomputers could keep up with the verification of incoming transactions.

The researchers say that the competition between the so-called crypto miners already consumes approximately the same amount of electricity as Switzerland.

“In short, the search for decentralization has quickly turned into an environmental disaster,” economists from the Bank for International Settlements said.

Anna Galvez