BIS Chief Advises Crypto Enthusiasts to “Stop Trying to Create Money”

BIS Chief Advises Crypto Enthusiasts to “Stop Trying to Create Money”

Francisco Memoria
  • The head of the "central banks' central bank" Agustin Carstens has recently advised crypto enthusiasts to "stop trying to create money."
  • Per his words, enthusiasts would be better off using their talents in other pursuits, as creating money has been a historical obsession that never worked.

The head of the Bank of International Settlements (BIS), Agustin Carstens, has recently revealed in an interview that he thinks young people – referring cryptocurrency enthusiasts – should “stop trying to create money,” and instead use their talents on something else.

During an interview with Swiss news outlet Basel Zeitung, Carstens attacked cryptocurrencies again, stating that they’re a “bubble, a Ponzi scheme, and an environmental disaster.” Per his words cryptocurrencies aren’t money, but “a form of investment, an asset” that can assume the functions of money.

Answering a question on whether cryptocurrencies have had a positive impact on young people by making them think about money and the financial system, Carstens asserted that creating money is nothing but a “regular obsession” that never worked. He pointed out that the great physicist Isaac Newton attempted to delve into alchemy to create gold, but failed.

He added:

After he failed in his attempt to make gold, he switched sides and sent counterfeiters to prison. So my message to young people would be: Stop trying to create money!

Agustin Carstens

When asked about why the BIS, an organization seen as the “central banks’ central bank” took so long to comment on cryptocurrencies, he revealed they were an “oddity that aroused the curiosity of only a handful of people.” As cryptocurrencies like bitcoin grew in popularity, the BIS “felt the need to come out very strongly to put the phenomenon into proper perspective.”

As for their future, he doesn’t see them have a happy ending. He said:

No, definitely not - no need to beat about the bush on that count. One mustn't forget that central banks have been providing electronic means of payment for decades (…) I can't imagine something coming along any time soon that would be more efficient and generate the same level of trust.

Agustin Carstens

Elsewhere in the interview, Carstens revealed he is concerned by the “pace of technological progress,” and advised young people – still referring to cryptocurrency enthusiasts – to focus on something else other than “reinventing money,” as it’s “a fallacy to think money can be created from nothing.”

Per the BIS chief, blockchain technology itself has potentially useful applications, but “producing money is not one of them.” He argued central banks should tighten anti-money laundering legislation and take measures against terrorism financing, as “they can still show how these pseudocurrencies serve as vehicles for illegal activities.”

Carstens has late last year slammed bitcoin using similar arguments, making him one of the flagship cryptocurrency’s biggest critics, along with billionaire investor Warren Buffet who’s also advised investors to “just beware.”

Featured image from Banco de México, Flickr, CC by 2.0