Crypto Is Not A Viable Alternative To Fiat Currency, Economist Agustín Carstens Says

Zinger Key Points
  • Legal infrastructure of central banks essential for trusted money, says Carstens.
  • Carstens says central bank digital currencies and tokenized deposits can enhance efficiency.

The argument that cryptocurrencies are a viable alternative to fiat currency has been settled in the wake of the digital-asset sector's recent turmoil, with technology not being an alternative for "trusted" money, according to the Bank for International Settlements' Agustín Carstens.

"That battle has been won," Carstens said. "A technology doesn't make for trusted money."

The cryptocurrency industry is reeling from a $2 trillion loss and the collapse of Sam Bankman-Fried's FTX exchange in November 2022.

See Also: This FTX Unit Is The First To Return Depositor Funds

As a result, claims that tokens can be reliable stores of value and mediums of exchange have been undermined.

For example, Bitcoin BTC/USD has fallen 65% from a high of nearly $69,000 in 2021 to $24,150.

Carstens emphasized that the only way to establish great credibility for money is through the legal and historical infrastructure behind central banks, adding that he anticipates a "strong statement" from the Group of 20 regarding stricter regulations for the digital-asset sector.

He believes that crypto is a financial activity that can only exist "under certain conditions."

See Also: EXCLUSIVE - BitPay Partners With ZenLedger To Streamline Cryptocurrency Tax Reporting

Carstens spoke at the Monetary Authority of Singapore about how central bank digital currencies (CBDCs) and tokenized deposits can enhance efficiency.

He recommended a model of a unified blockchain under a public-private partnership, with a central bank providing trust in CBDCs.

Carstens also addressed private-sector stablecoins, stating that regulators must ensure that they do not harm investors and consumers or fragment the monetary system.

Stablecoins are crypto tokens that are supposed to maintain a set value, such as $1, but some have exploded, causing investors to lose money.

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Posted In: CryptocurrencyNewsTop StoriesMarketsAgustin CarstensBank for International SettlementsCentral bank digital currenciescryptocurrency tradingDigital Assetfiat currencyG20Stablecoins
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