BIS Head Called Bitcoin a Ponzi Scheme, Urged Central Banks To Act Against It

BIS Head Called Bitcoin a Ponzi Scheme, Urged Central Banks To Act Against It

Agustin Carstens, the General Manager of world’s central banks ‘parasol’ – Bank for International Settlements – has expressed his negative attitude towards cyber assets. He compared BTC to a bubble and a Ponzi scheme at the same time as well as urged central banks to be cautious with cryptos.

Central Banks To Raise Against Cryptos?

On February 6, the head of BIS, famous Mexican economist Carstens said that cyber currencies, including BTC, were not as stable as fiat money. He also added that they could not fit the traditional definition of currency and called top banks all over the globe to be ready to oppose them.

Central banks will have to do it, according to Carstens, to prevent a situation whereby they become less credible when cryptos take roots in the financial sphere, as Reuters reported.

Taking the floor at Goethe University in Frankfurt, Carstens also emphasized that virtual money has caused a need for regulatory interference. In particular, he said that cyber-coins could make both investors and average people fretting. Therefore, governments should take the lead and be ready to safeguard them from risks that cryptos carry.

“Private digital tokens masquerading as currencies must not subvert this trust (in central banks),” also said BIS head.

Bitcoin As a Bubble

Being recent among world top leaders, who have spoken not in favor of cryptos, Carstens went on to calling bitcoin a unit of “a bubble, a Ponzi scheme, and an environmental disaster.” The last point, by the way, was alluding to the process of virtual assets production – mining.

As it is known, mining consumes a lot of power, and Carstens is not the first policymaker who has expressed concerns over this issue. Previously, Christine Lagarde, the International Monetary Fund Managing Director, called mining as an “energy angry” process.

Cryptos As a Breach For Criminals

Moreover, BIS head suggested that cyber money might become “parasites” in the real-time financial industry. But to preclude such a situation, governments should make sure that only licensed and verified platforms and other products are permitted to take part in banking services like making transactions, etc. To sound uncompliant, Carstens added that no exclusions could be made in this regulatory issue.

Lots of countries have already concerned about money laundering, the supply of terrorism and purchase of tabooed items, to which crypto market can lead. And Carstens seems to have agreed with this attitude.

“Individuals who massively evade taxes or launder money are the ones who are willing to live with cryptocurrencies’ extreme price volatility,” added he.

Interestingly, UK’s Prime Minister Theresa May has also warned the world against the use of cryptos by people with malicious intentions.

Such countries, as China and South Korea, have already started taking measures against cyber money market which jeopardizes, according to their view, both the economy and the financial stability of ordinary consumers. Such tackling policy, as well as speculation around it, has become one of the factors which caused the crypto market to drop by 50% recently.