Augustin Carstens, the head of the Bank of International Settlements (BIS), has recently argued central banks throughout the world shouldn’t issue their own cryptocurrencies, as these could have “huge operational consequences” and “implications for the stability of the financial system.”
According to news outlet CityAM, Carstens’ words came during a speech at the Central Bank of Ireland, in which he pointed out he believes central bank digital currencies (CBDC) are going to have consequences “for central banks in implementing monetary policy and implications for the stability of the financial system.”
He noted that traditionally, central banks ensure “inflation is under control, the economy runs smoothly and the financial system is sound.” This, while commercial banks “thrive by attracting and serving customers.”
Central bank digital currencies, Carstens said, would “change the demand for base money and its composition in unpredictable ways.” He added:
Central banks do not put a brake on innovations just for the sake of it. But neither should they speed ahead disregarding all traffic condition
Notably, his words come shortly after J.P. Morgan Chase, the largest US bank and the world’s sixth largest bank, revealed it’s launching its own cryptocurrency, the JPM Coin, which is set to be used for instant payment settlements for clients.
Jamie Dimon, J.P. Morgan’s CEO, was a notable bitcoin critic back in 2017, when the flagship cryptocurrency’s price was rising to its near $20,000 all-time high. As time went by he started distancing himself from it, presumably as the financial institution focused on its own crypto.
JPM Coin has, however, been under fire as economists, cryptocurrency miners, investment managers, crypto pioneers, and advocates have criticized the stablecoin. Dimon has, however, hinted the coin could eventually be used by consumers.
Carstens himself has in the past criticized cryptocurrencies, as he advised crypto enthusiasts to “stop trying to create money.” Per his words, enthusiasts would be better off pursuing other things with their talents, as creating money has been a historical obsession that never really worked.