As the Bank for International Settlements’ (BIS), also known as “the central bank of central banks,” tried to monopolize trust in money with its new report this week, analysts stress that it simply represents “a legacy vision” that brings a number of new risks, and the BIS fails to recognize “revolutionary benefits” of the still-nascent crypto industry.
The BIS report’s chapter on the future monetary system was officially unveiled on Tuesday this week, with one particular comment from BIS General Manager Agustín Carstens receiving attention from the crypto community:
“My main message today is simple: the soul of money belongs neither to a big tech nor to an anonymous ledger. The soul of money is trust.”
‘A legacy institution’
According to Ben Caselin, the Head of Research and Strategy at crypto exchange AAX, the BIS with its report and corresponding comment underscores that it is “a legacy institution protective and in favor of a legacy vision for digital money.”
“When it comes to the ‘soul of money’ there can be no neutrality and the latest report by BIS underscores this,” Caselin told Cryptonews.com.
He added that the fiat system already suffers from “currency debasement and arbitrary policy changes.” Central bank digital currencies (CBDCs) are an effort at keeping this going for longer, with added risks around “privacy, financial autonomy and ultimately, inclusion,” he said.
Moreover, AAX’s research head pointed out that Bitcoin (BTC) – as an alternative to CBDCs – continues to see adoption in both developed and emerging markets. And according to Caselin, those who adopt BTC also see it “as a hedge against oppression and violence.”
“Adopting a non-sovereign currency that is not controlled by any single entity and that cannot be claimed by any single country allows people to reimagine and redefine citizenship and enable them to take basic but core values and rights into the new digital economy ahead,” Caselin said.
Crypto is still in ‘testing phase’
According to crypto broker GlobalBlock analyst Marcus Sotiriou, the new report from the BIS is right on some points, such as the importance of safety and stability for a global monetary system.
What the report fails to recognize, however, is that the crypto industry is just 13 years old, and that “we are still going through the testing phase,” Sotiriou told Cryptonews.com.
“There will be many project failures, like we have seen with UST stablecoin, but this is part of the process of natural selection. We can compare this to the dotcom bubble, where most technology companies failed but some became the biggest and most innovative companies in the world today,” he said.
This week, a similar statement was made even by Bank of England Deputy Governor Jon Cunliffe, who also compared the current crash with the dotcom boom.
“A lot of companies went, but the technology didn’t go away. It came back 10 years later, and those that survived — the Amazons and the eBays — turned out to be the dominant players,” he was quoted as saying by Bloomberg.
Meanwhile, Sotiriou added that although Bitcoin is targeting a role as global money for the Internet, “most cryptocurrencies are not aiming to be money.”
Instead, they aim to be an asset used to operate a particular blockchain network, that in turn “solves a unique problem,” he said. “The reason why most cryptoassets have value is because of the growth in the networks they are used on, rather than how suitable they are for a monetary system.”
Lastly, Sotiriou noted that although “many drawbacks” to DeFi exist today, the report fails to recognize its “revolutionary benefits.”
“There are over 1 billion people in the world who are unbanked, and decentralized finance can be a solution for these people, many of whom have access to the internet to use crypto instead of a bank,” the GlobalBlock analyst said.