According to Agustin Carstens, the head of the Bank for International Settlements (BIS), cryptocurrencies have lost the “battle” against fiat currencies issued by the world’s central banks. While speaking at the Monetary Authority of Singapore on Wednesday, Carstens stressed that stablecoins are not reliable because they lack the “institutional arrangements and social conventions behind them.”
Agustin Carstens Insists Cryptocurrencies Lost the ‘Battle’ to Fiat Currencies
Agustin Carstens, the general manager of the Bank for International Settlements (BIS), believes that cryptocurrencies have lost the battle against national currencies such as the euro, pound, and yen. Carstens gave a speech at the Monetary Authority of Singapore and was also interviewed by Bloomberg News. The BIS general manager told Bloomberg that the battle between fiat and crypto assets “has been won.” Carstens insisted that technology alone does not make for “trusted money.” The BIS GM added:
Only the legal, historical infrastructure behind central banks can give great credibility to money.
‘Stablecoins Cannot Guarantee the Singleness of Money’
Carstens made similar statements during a speech at the Monetary Authority of Singapore, using stablecoins as an example. He said that there will always be “alternative visions of what a future monetary system and digital money could look like” and added that some cryptocurrency proponents believe stablecoins will be the future of money. The BIS general manager wholeheartedly disagrees because he thinks these proponents forget what sustains fiat currencies.
“What this view forgets is that what sustains fiat money is not the application of novel technologies but all the institutional arrangements and social conventions behind it,” Carstens said. “And it is precisely these arrangements and conventions that make money reliable for the public.”
Carstens detailed that the events of the past year have raised serious concerns about whether stablecoins can function as money. He noted that stablecoins rely on the credibility of fiat with fewer regulatory protections, which means they cannot ensure the unity of money. “[Stablecoins] do not settle in central bank money or enjoy lender-of-last-resort support,” Carstens said. “Accordingly, they cannot guarantee the singleness of money.” Carstens believes that central bank digital currencies, on the other hand, could “provide safe and stable money.”
Carstens concluded that it is important for today’s financial incumbents, specifically central banks, to contribute to this type of innovation. “If central banks do not innovate, others will step in,” Carstens warned. “In the meantime, we must ensure that stablecoins do not harm investors and consumers, or contribute to a fragmentation of the monetary system that undermines the singleness of money.”
Do you agree with Agustin Carstens’ view that stablecoins cannot guarantee the singleness of money, and that central bank digital currencies are the way forward for safe and stable money? Share your thoughts in the comments section below.