Cryptocurrencies have lost the “battle” against fiat currencies issued by central banks around the world, according to Agustin Carstens, head of the Bank for International Settlements (BIS). Speaking at the Monetary Authority of Singapore on Wednesday, Carstens stressed that stablecoins cannot be trusted because they lack “institutional arrangements and social conventions behind them.”
Agustin Carstens claims Cryptocurrencies lost the “battle” to Fiat Currencies
Agustin Carstens, general manager of the Bank for International Settlements (BIS), believes cryptocurrencies have lost the battle against national currencies such as the euro, pound, and yen. Carstens gave aspeechat the Monetary Authority of Singapore and was interviewed by Bloomberg News, the general manager of the BIStold. Bloomberg that the battle between Fiat and crypto assets was “won.” Carstens argued that technology alone is not “trusted money,” the BIS GM added,
Only the legal and historical infrastructure behind the central bank can give money great credibility.
Stablecoin cannot guarantee the unity of money,”
Carstens made a similar statement in a speech at the Monetary Authority of Singapore, using stable coins as an example. He said that there will always be “alternative visions of what the future monetary system and digital money could look like,” adding that some cryptocurrency supporters believe that stablecoins will be the money of the future The BIS Governor forgot what these supporters support fiat money and therefore do not agree wholeheartedly.
“What this view forgets,” Carstens said, “is that what supports fiat money is not the application of new technology, but all the institutional arrangements and social practices behind it.” And it is precisely these arrangements and conventions that make money reliable for the masses.”
Carstens detailed that events over the past year have raised serious concerns about whether stablecoins can function as money. He noted that stablecoins rely on the trustworthiness of fiat with few regulatory protections, and thus cannot ensure monetary uniformity.” Carstens said, “(Stablecoins) are not settled in central bank money and do not enjoy the support of a lender of last resort.” Thus, they cannot guarantee the unity of money.” Carstens, on the other hand, believes that central bank digital currencies “can provide a safe and stable money.”
Carstens concludes that it is important for today’s financial incumbents, specifically central banks, to contribute to this type of innovation. Carstens warns, “If central banks don’t innovate, other banks will step in.” ‘On the other hand, we must ensure that stable coins do not harm investors and consumers and do not lead to the fragmentation of the financial system.’
