Revolutionary digital assets, cryptocurrencies have transformed the global financial landscape to the point of challenging the existence of traditional financial systems. They offer many benefits to their users and the number of users continues to grow. However, cryptos can also present certain setbacks. Defects which do not militate in their favor and which recently prompted the Bank for International Settlements to declare them unsuitable as monetary tools.
Cryptocurrencies as monetary tools: the BIS rejects the idea
While experts focus on the conditions required for the mass adoption of cryptocurrencies, the Bank for International Settlements is playing spoilsport with its strong position on these digital assets. Indeed, in a recent report sent to G20 finance ministers, the BRI said that cryptos cannot be used as currencies.
Despite the innovative advantages of these assets, the central banking of central banks points to their problems of instability, inefficiency and accountability which are why they cannot be used as monetary tools. In its report, the BRI states that “ crypto has so far failed to harness innovation for the benefit of society” despite the enthusiasm of individual and institutional investors.
She adds : “ Crypto remains largely self-referential and does not fund real economic activity. (…) Inherent structural flaws make it unfit to play a meaningful role in the monetary system “.
Hacks and collapses of the year 2022: too many troubles?
The year 2022 has been full of regrettable facts and events. She has seen hacks in the crypto industry multiply. It also saw the fall of the FTX exchange and the collapse of Terra (Luna). These events will all have been detrimental to cryptocurrencies.
Indeed, the BIS presents them in its report as important troubles that do not favor the use of cryptos as currencies. The central bank of central banks also points to the risk of hacks, scaling issues, and rug pulls that are doing cryptos a disservice.
The Bank for International Settlements is therefore against the recognition of cryptos as monetary tools. A position that hardly comes as a surprise, as the BIS has recently promoted CBDCs against cryptocurrencies. The bank of central banks sees CBDCs as digital assets that could very soon replace cryptocurrencies.
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