BIS’s Benoit Coeure says bitcoin fails the test of a currency
Global central banks must come up with safer options that reap the benefits of technological innovation, says Bank of International Settlement’s Innovation Hub chief
Bitcoin’s volatile value makes it impossible to consider the crypto-asset a currency, according to the Bank of International Settlement’s (BIS) Benoit Coeure.
“Bitcoin can be an investment instrument and it’s not for me to judge on that or to advise on that,” the head of the BIS Innovation Hub said in an interview with Bloomberg Television. “But it has failed the test of being a currency, it has failed the test of being a payment instrument — just because the value is moving around so much.”
Coeure said it’s important for global central banks to provide financial security to citizens and come up with safer options that reap the benefits of technological innovation. Many institutions are currently exploring prospects for issuing digital versions of their currencies — a move that could shake up the way money works while also allowing them to retain control.
“Central banks are focused on an instrument that would provide liquidity, that would provide safety, and that can be used as a commodity in the global payments system,” Coeure said in the interview. “That’s why we want to look into central bank digital currency. Crypto has its place under the sun, but it’s different — it’s not a payment instrument.”
The European Central Bank (ECB) is studying possibilities for a digital euro. President Christine Lagarde said at a BIS event on Thursday that monetary authorities must keep up with the rapid pace of innovation, and two of her colleagues sought to push back against concerns it will come at a cost.
There is “no truth to the claim that the ECB is planning to impose significantly more negative interest rates via a digital euro”, executive board member Fabio Panetta and Ulrich Bindseil, director-general market infrastructure and payments at the ECB, wrote in an opinion piece for Germany’s Frankfurter Allgemeine Zeitung.
“As long as there is cash, people can continue to hold it at an interest rate equal to zero,” they said. The ECB also wouldn’t want to draw significant amounts of deposits away from banks as it has no interest in “redesigning the European financial system”.
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