Crypto Has Lost the Battle Against Fiat: BIS Chief Agustin Carstens

Getting backlashes from traditional financial institutions

is nothing new for the crypto industry and this time, the BIS chief himself came forward to take the charge against crypto. 

According to Agustin Carstens, the head of the Bank for International Settlements, the argument that cryptocurrency is an alternative to fiat currency has been definitively settled following last year's tumultuous events in the cryptocurrency markets. 

“The debate is over,” Carstens declared in a Bloomberg TV interview on Wednesday. “Technology alone cannot create a reliable form of money.”

Carstens' comments come after a year of extreme volatility in the cryptocurrency market, which saw the total market capitalization of digital assets drop by more than 80% from its peak in January 2018. 

This might lead to many questions on the viability of cryptocurrencies as a reliable alternative to traditional money, and Carstens' remarks assert that he does not consider it a suitable replacement. According to him only the history of traditional financial organizations can give reliability to money and crypto can exist in certain specific conditions. 

Carstens addressed the Monetary Authority of Singapore, emphasizing the potential of central bank digital currencies (CBDCs) and tokenized deposits to increase efficiency. He proposed a unified blockchain model under a public-private partnership, with the central bank providing the trust necessary for CBDCs to succeed. According to his opinions, private cryptocurrencies can never gain the legitimate right to replace fiat money. 

He also suggested that stablecoins are financial tools that do not pose a risk to investors and consumers, nor disrupt the existing monetary system. The message from the global banker was clear that he is more than willing to incorporate blockchain assets in the prevailing financial system without its volatility. 

As the crypto market is relatively new and crypto adoption is still in progress, the stability in the high market cap assets is only a matter of time. Carstens’s concerns are valid but contrary to his analogy, no battle is going on between crypto and fiat. 

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