Plus   Neg

BIS Chief Carstens Says Bitcoin Is A Bubble, Ponzi, And Disaster


The head of the Bank for International Settlements is forecasting a gloomy future for cryptocurrencies.

"While perhaps intended as an alternative payment system with no government involvement, it has become a combination of a bubble, a Ponzi scheme and an environmental disaster," says Augustin Carstens, General Manager of the BIS.

In a speech at Goethe University's House of Finance in Frankfurt Tuesday, he called into question Bitcoin's efficiency and legality.

Incidentally, Bitcoin plunged to its lowest price in three-months Tuesday, when global mainstream markets also witnessed a collapse across the board.

Bitcoin lost one third of its value from a record high price of $19,511 it reached six weeks ago.

However, later, after the US Senate Banking committee heard testimony from the chairmen of Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), that set a positive tone, the bitcoin price recovered to trade at about $8200.

Carsten's address was part of a lecture series sponsored by Sustainable Architecture for Finance in Europe, the Center for Financial Studies, and the Deutsche Bundesbank.

The former Governor of the Bank of Mexico noted that the authorities had a duty to protect consumers and ensure that cryptocurrencies could not be used to evade tax, launder money or finance criminal activities.

"The volatility of bitcoin renders it a poor means of payment and a crazy way to store value," according to Carsten.

He was specifically pessimistic about the "house of bitcoin" where cracks began appearing as too many copycat currencies such as bitcoin gold and bitcoin cash could only lead to debasement of cryptocurrencies to the point where they held no economic value at all.

Carsen had taken over as the General Manager of BIS in December.

The BIS is known as the central banker to the world's central banks, as that is where the likes of the Federal Reserve and Bank of England hold their accounts.

The BIS special drawing rights balance nears a quarter trillion in reserves.

For comments and feedback contact: editorial@rttnews.com

Economic News

What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.

Follow RTT