Bank for International Settlements official questions El Salvador’s bitcoin “experiment”

By David Milliken and Huw Jones

LONDON, Jun 11 (.) – El Salvador’s decision to make bitcoin legal tender is an “interesting experiment” with a speculative asset that fails the test of being a reliable means of payment, a senior said on Friday. official of the world central bank.

The Central American country became the first in the world to adopt bitcoin as its national currency on Wednesday, saying it would help Salvadorans living abroad send remittances home.

“El Salvador is an interesting experiment indeed,” said Benoit Coeuré, head of the innovation center at the Bank for International Settlements (BIS).

“At the BIS we have been clear that we do not see that bitcoin has passed the test of being a means of payment. Bitcoin is a speculative asset and should be regulated as such,” Coeuré said in a presentation at a regulatory research center. at the Bank of England (BoE).

The comments echo observations from the International Monetary Fund, which said Thursday that it has economic and legal concerns regarding the decision by El Salvador, which already substituted the dollar for its national currency in 2001.

Rapid advancements in private sector electronic payments and reduced use of cash, accelerated by COVID-19, have forced central banks to consider developing digital versions of their own legal tender, known as digital currencies. central bank.

“We have to be at the forefront of technology,” Coeuré said. “We have to work with the private sector.”

The BIS is creating a network of innovation hubs around the world for central banks to share information on new payments technology and keep up with private sector initiatives such as Facebook’s Diem ‘stablecoin’.

Stablecoins are cryptocurrencies designed to have a stable value relative to traditional currencies or a commodity such as gold, to avoid the volatility that makes bitcoin and other digital tokens impractical for most trade.

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BoE Governor Andrew Bailey said regulators are cooperating closely on the potential impact of stablecoins on financial stability, and also on the development of their own digital currencies.

“If this happens, it will be one of the most fundamental innovations in central banking history. It will lead us into a new era,” Bailey said.

Earlier this week, financial regulators in major economies proposed strict capital rules for banks holding cryptocurrencies, and Bailey said that any stablecoin-based payment system would have to meet the same standards as banks.

(Edited in Spanish by Javier López de Lérida)

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