The Bank for International Settlements (BIS), a global institution of central banks, claims that previously identified crypto weaknesses have “materialized considerably. “BIS General Manager Agustin Carstens opined that ” You cannot defy gravity … At some point, you really have to face the music.”
The BIS has
mentioned the weakness of crypto.
The Bank for International Settlements (BIS) warns that the dangers of decentralized digital money are materializing.
In its annual economic report released Tuesday, the BIS explained that the sell-off of crypto markets and the collapse of the cryptocurrency Terra (LUNA) and Algorithm Stable Cointegrated (UST) are indicators of structural problems in crypto.
“Structural flaws render the crypto world unsuitable as the basis for a monetary system: it lacks a stable nominal anchor, and its scalability limitations lead to fragmentation; the BIS report states that “contrary to decentralization, crypto often depends on unregulated intermediaries who pose financial risks ” and states.
Agustin Carstens, general manager of the BIS, said in an interview with Reuters Tuesday that any form of money is ultimately unreliable without a government-backed authority that can use tax-funded reserves. He opined.
I think all these weaknesses that have been pointed out before are quite materialized.
The BIS executive continued.” You can’t defy gravity … at some point, you really have to face the music.”
Carstens does not believe that a meltdown in the crypto markets will cause a systemic crisis, just as bad loans caused the global financial crisis. He elaborated.
Based on what we know, it should be very manageable. But there is a lot we don’t know.
The BIS official went on to talk about central bank digital currencies (CBDCs); in a report released in May, the BIS said that nine out of 10 central banks worldwide are exploring their own digital currencies.
“This is a topic that has been on the G20 agenda for quite some time.” Carstens added to the news outlet, “There is a good chance this will move forward.” He noted that several countries have already conducted “real-world” trials with central bank digital currencies.
Carstens noted that he thinks an international standard for CBDC could be ready “in the next couple of years,” and that 12 months is probably “too short.”
This week, the BIS Innovation Hub announced that the Eurosystem Center project will explore the cryptocurrency market. Citing “the collapse of many stablecoin and decentralized financial (defi) lending platforms has highlighted the difficulty of assessing their risk and economic potential,” the BIS explained.” The goal of the project is to create an open-source market information platform that sheds light on risks to market capitalization, economic activity, and financial stability.”
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