Central Banks: Cryptocurrencies Not Real Money
Sharing at WEF, leaders of some central banks do not consider digital currency as a reliable means of payment, not even money.
Prices of all kinds digital currency such as Bitcoin, Ethereum and many stablecoins (stablecoins) such as Luna and TerraUSD recently plunged, causing investors’ assets to evaporate sharply. This further makes the possibility that digital currencies will be accepted by central banks around the world.
Discussing at the World Economic Forum (WEF) in Davos on May 23, several leaders expressed this view. “Bitcoin can be called a coin, but not money. It is not a stable store of value,” said International Monetary Fund (IMF) Director-General Kristalina Georgieva.
Many cryptocurrencies are similar to pyramids, she said, because they are not backed by real assets. Even so, she believes that central bank-issued digital currencies (CBDCs) are in fact stable.
IMF Managing Director Kristalina Georgieva (blue shirt) and Governor of the Bank of Thailand at a discussion session on May 23. Screenshot of the WEF . event
The Governor of the Bank of France François Villeroy de Galhau also shared this view. “Cryptocurrency is not a reliable means of payment. Someone has to take responsibility for the value and it has to be accepted globally as a medium of exchange. Cryptocurrencies are not like that,” he explained. . He also added that some French people have “lost faith in cryptocurrencies” because of the recent major volatility.
Since they don’t see cryptocurrencies as money, financial leaders wonder what the long-term goal of this tool should be. Bank of Thailand Governor Sethaput Suthiwartnarueput said the country is experimenting with cryptocurrencies, but from their point of view they need to know clearly what the problem is.
“We don’t want to treat cryptocurrencies as a means of payment,” he stated, adding that it is an investment instrument rather than a medium of exchange. François Villeroy de Galhau further cites El Salvador’s trial to legalize Bitcoin showing how risky accepting cryptocurrencies can be.
Ms. Georgieva suggested that central bank cryptocurrencies (CBDCs) could be a “global public good”, helping people send money across borders. The key is in interoperability, so that transferring cryptocurrencies is as easy as USD or euro.
According to experts, it will take some time for cryptocurrencies to develop and be considered normal for consumers, large financial institutions, and governments. Lawmakers in the US as well as the Federal Reserve are also debating the pros and cons of digitally backed currencies.
“There is no simple solution to this complex problem,” concludes Axel Lehmann, President of Credit Suisse (CS).
Session An (according to CNN)
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