The head of the Bank for International Settlements (BIS) has argued that central banks need to take pro-active measures against cryptocurrencies to prevent them from becoming a ‘threat to financial stability.’
Agustín Carstens, the General Manager of the BIS, said that there was ‘a strong case for policy intervention,’ during his first speech as head of the Swiss-based BIS, reports Reuters.
Cryptocurrencies piggyback on the institutional infrastructure that serves the wider financial system, gaining a semblance of legitimacy from their links to it, he said, speaking at Frankfurt’s Goethe University.
Agustín said that banks have a duty to educate and protect customers and their assets and to be prepared to act.
His comments come at a time of increasing regulatory pressure from global authorities. India has joined China and South Korea with plans to clamp down on certain parts of the market.
Whereas, bans from credit card companies have also seen market prices being impacted. Earlier this month it was reported that JPMorgan, Bank of America, Citigroup, and more recently, Lloyds Banking Group, were prohibiting its customers from buying cryptocurrencies such as bitcoin with credit cards.
As a result of these factors, volatile trading saw the price of bitcoin fall to below $6,000 on Tuesday, having lost around two-thirds of its value when it was within touching distance of $20,000 in December.
The start of 2018 has proven tough for the cryptocurrency market, which has seen its market cap drop from an all-time high of $830 billion to $336 billion, at the time of publishing, according to CoinMarketCap.
Carstens is the latest figure to join the growing list of naysayers against the digital currency market by remarking that:
Bitcoin is not functional as a means of payment, but it relies on the oxygen provided by the connection to standard means of payments and trading apps that link users to conventional bank accounts.
Mario Draghi, the president of the European Central Bank (ECB), said yesterday that digital currencies are unregulated and ‘very risky assets‘ that should be treated with caution, reports the Financial News.
It’s interesting to note that Draghi initially said back in October that cryptocurrencies like bitcoin were not ‘mature‘ enough to regulate. However, while he did say that innovation should be ‘cherished for its potential benefits,’ it should also be ‘critically assessed’ for risks.
Whereas, the U.K.’s Prime Minister Theresa May, said at the recent World Economic Forum in Davos, Switzerland, that she ‘very seriously‘ wants to look into the use of cryptocurrencies due to their potential use in crime.
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