Central banks launched a crackdown on cryptocurrencies just weeks after the global banking regulator He called for stricter rules To hold digital assets, referring to the escalating battle for control of the monetary system.
In a report published on Wednesday, the Bank for International Settlements, the global body for central banks, argued that Bitcoin has few redemption features, dismissed stablecoins as an “adjunct” to the existing monetary system and warned that private innovation in the payments sector is against the public good.
The tough-worded report was the clearest signal yet from central banks that they are not ready to relinquish their key role in the global financial system.
It came just days after Fabio Panetta, the European Central Bank policymaker responsible for developing its own digital euro, told the Financial Times that one of the main goals of the project was Combating the spread of digital currencies Created by other countries and companies.
The Bank for International Settlements said in its report: “Central banks are at the heart of the rapid transformation of the financial sector and the payments system. Innovations such as cryptocurrencies, stablecoins, and gated park systems for major technology tend to work against the public good that underpins the payment system.”
In contrast, the Bank for International Settlements supported the development of digital currencies backed by central banks, saying that it could be a tool for achieving greater financial inclusion and reducing the high costs of payments.
“Central bank digital currencies . . . present in digital form the unique advantages of central bank money: settlement finality, liquidity and integrity. It is an advanced representation of money for the digital economy. [and should be] It was designed with the public interest in mind.”
Cryptocurrency prices are under pressure from investors’ growing fears of facing increased regulation in China and other countries. Authorities in several major economies have recently intensified their efforts to curb the growing popularity of Bitcoin and its peers due to concerns that policymakers are losing control of a growing part of the financial system.
The Bitcoin price It fell below $30,000 on Tuesday for the first time since January, after hitting a peak in April of $63,573.
“Cryptocurrencies are clearly speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes,” the BIS said. “Bitcoin in particular has a bit of a public interest redeeming trait when also looking at the footprint of wasted energy.”
It also targeted the global financial authority stablecoinsCryptocurrencies are linked to other assets. The BIS said they are “trying to import credibility by backing them up with real currencies,” but that other than fragmenting financial systems and introducing new difficulties, they are “ultimately just an accessory to the traditional monetary system and not a game changer.”
The Bank for International Settlements has also criticized technology companies choosing to engage in the payments sector, warning that some may become overly dominant due to the vast amounts of data they possess and warning that this could lead to exorbitant money transfer costs.
The report added that the exorbitant payments were “one of the most intractable shortcomings” of the current system.
“The concern is that when big tech companies enter the payments market, their access to user data from their associated digital lines of business may allow them to achieve a dominant position, resulting in fees higher than those currently charged by credit and debit card companies,” the BIS said. .