Bank for International Settlements damns Bitcoin in report backing central bank digital currencies

In a chapter released ahead of its full report later this month, The Bank for International Settlements (BIS), set out the case for central bank digital currencies (CBDCs) while at the same time expounding on the generally held banking view that Bitcoin is speculative and that it is used for nefarious activities. 

The Bank for International Settlements has jumped on the Bitcoin bashing bandwagon with the release of a chapter from its annual report. This particular chapter was dedicated to CBDCs and how they were eminently more preferable to Bitcoin. In the introduction, the report read that CBDCs will: 

“contribute to an open, safe and competitive monetary system that supports innovation and serves the public interest.” 

The report then moves on to discuss “money in the digital era” and makes the following statement: 

“By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes. Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint.” 

The report also seeks to critique the burgeoning use of stablecoins, stating that they try to retain “credibility” by being “backed by real currencies”. The writer of the report seeks to highlight their damaging potential and also downgrade their importance by remarking that they have the “potential to fragment the liquidity of the monetary system” and that they are “ultimately only an appendage to the conventional monetary system and not a game changer.” 

Going back to the report’s “wasteful energy footprint”, which echoes media accounts of how Bitcoin is failing to comply with pro environmental measures, there was no mention of how the banking industry was faring in this particular endeavour. 

There was also no mention of how easy it would be to track a criminal should they try to use the Bitcoin network, given that it is based on transparent and immutable blockchain technology. 

The report comes on the back of a generally hardening stance on cryptocurrencies by the bank. A recently released consultation paper accused cryptocurrencies of causing financial instability, and also imposed a new rule, requiring banks to have enough capital set aside for losses sustained by dealing in crypto. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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