BIS General Manager Casts Doubt on Stablecoins, Claiming Tokens Do Not Benefit From Regulations or Central Planning

According to Agustin Carstens, head of the Bank for International Settlements (BIS), cryptocurrencies have lost the “battle” against fiat currencies issued by the world’s central banks. Speaking to the Monetary Authority of Singapore on Wednesday, Carstens stressed that stablecoins are unreliable because they do not have “institutional arrangements and social agreements” behind them.

Agustin Carstens insists cryptocurrencies have lost the ‘battle’ against fiat currencies

Agustin Carstens, 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 speech at the Monetary Authority of Singapore, and was also interviewed by Bloomberg News. BIS General Director said Bloomberg claims that the battle between fiat and crypto assets is “won”. Carstens insisted that technology alone does not bring “reliable money”. GM BIS added:

Only the legal, historical infrastructure of central banks can give money great credibility.

“Stablecoins cannot guarantee the uniqueness of money”

Carstens made similar statements during a speech at the Monetary Authority of Singapore on the example of stablecoins. He said there will always be “alternative views of what the future monetary system and digital money might look like,” and added that some cryptocurrency proponents believe that stablecoins will be the future of money. The BIS General Manager wholeheartedly disagrees because he thinks these proponents are forgetting that they support fiat currencies.

“This view overlooks that what sustains fiat money is not the application of new technologies, but all the institutional arrangements and social conventions behind it,” Carstens said. “And it is these arrangements and conventions that make money reliable for society.”

Carstens elaborated that the events of the past year have raised serious concerns about whether stablecoins can function like money. He noted that stablecoins rely on trust in fiat with less regulatory protection, meaning they cannot ensure the unity of money. “[Stablecoins] do not settle in central bank money and do not use the support of a lender of last resort,” Carstens said. “Accordingly, they cannot guarantee the uniqueness of money.” Carstens believes that central bank digital currencies, on the other hand, can “provide safe and stable money.”

Carstens concluded that it is important for modern financial institutions, especially central banks, to contribute to this type of innovation. “If central banks don’t innovate, others will step in,” Carstens warned. “In the meantime, we need to make sure that stablecoins do not harm investors and consumers and do not contribute to the fragmentation of the monetary system, which undermines the unity of money.”

Do you agree with Agustin Carstens’ opinion that stablecoins cannot guarantee the unity of money and that central bank digital currencies are the way to secure and stable money? Share your thoughts in the comments section below.