The Long-Warned Dangers Of Cryptos Are Now A Reality – BIS

The Long-Warned Dangers Of Cryptos Are Now A Reality – BIS

June 23, 2022 0 By Jeanine Sanchez

Bank for international settlement (BIS) has stated that the collapse currently happening in the crypto space is a prediction that is gradually coming to fulfillment. The BIS gave the warning in its next annual report. It also encouraged apex banks worldwide to enhance their efforts in establishing a national digital currency.

The Problem With The Crypto Space

It also asked them to ensure that their CBDCs are very appealing to their citizens. Agustin Carstens, a top-level executive of the BIS, said there is a structural problem with the crypto market.

He referenced the recent crash of the Terra network, the 70% drop in BTC price, and the current crypto market conditions to support his claims. Carstens added that any form of money without a government-backed authority lacks credibility.

According to him, the authority would be responsible for funding the reserves with taxes. It would also use the money for other appropriate purposes. Carstens spoke with Reuters, saying, “I think all the previous fears we had about the digital currency are now becoming a reality.”

He added, “it is impossible to go against gravity. There would be a time you need to face the consequences of your action.” Various data analytics showed that the overall evaluation of the crypto market had dropped over $2 trillion from last November.

He also said that the troubles in the market started at that time. However, Carstens claims that the decline in the crypto market won’t have the same effect as the 2008 bad loans. Excess of bad loans was responsible for the 2008 global financial collapse.

Instead, Carstens stated that losses would be minimal compared to the size of the losses in 2008. He added that the lack of clarity regarding the crypto space is the push behind its uncertainty. Carstens also said, “if our knowledge about the space is the true picture, then the solution is still manageable. But the problem is that so much about it isn’t clear to us.”

The BIS’ Vision Of Future Money

The BIS has never hidden its hatred for cryptos. Hence, it laid a new framework for its vision for the future of money. In this future monetary system, central banks would use blockchain technology to develop digital versions of their fiat currencies; blockchain technology powers BTC and other digital assets. 

Recent data shows about 90% of apex banks are researching or developing their national digital currencies. Many of them hope it would be the ideal replacement for cryptocurrencies. However, the BIS wants to oversee these national digital currencies such that they can operate with one another.

The BIS intends to offer solutions to the technological and geopolitical issues that may affect the cross-border use of these CBDCs. “The G20 has been discussing this topic for some time now. Hence, we would make progress on it soon,” Carstens concluded.