In a fresh report, the Bank for International Settlements (BIS) expressed robust scepticism regarding the potential role of cryptocurrencies in the global monetary system, citing “inherent structural flaws.” The report, purpose-built for a G20 finance ministers meeting, argues that crypto’s stability, efficiency, accountability, and integrity issues are the culprits that hinders its utility as legalized tender.
According to the BIS, millions of enthusiastic retail investors and an increasing number of institutional investors have now penetrated the crypto ecosystem, transforming it from a marginal enterprise to an influence on the mainstream financial structure. They recognised bitcoin (BTC) and several other cryptocurrencies, in spite of downplaying their relevance.
Cryptocurrency, despite the criticism, isn’t wholly dismissed by the bank. The report’s authors identified and praised some “elements of genuine innovation” in crypto, such as the “programmability” of money. This coding ability introduces a new spectrum of functionalities to money, including the prospects of automating and seamlessly integrating sequences of financial transactions.
The notion of programmatic money picked the BIS‘s interest and was later spotlighted in another bank report focusing on unified central bank digital currencies (CBDCs) released recently. These revelations bring a different dimension to an otherwise skeptical disposition.
Moreover, regardless of the acknowledgement of these innovative aspects in cryptocurrency, the report firmly stated that it has “failed to harness innovation to the benefit of society”. The crypto ecosystem, according to BIS, remains self-referential and makes no significant contribution to actual economic activity.
Considering these factors, and in culminating its analysis, the BIS declared that crypto is unfit to play an influential role as global money. On one side there’s an acknowledgement of the innovative potentials within the world of cryptocurrency, and on the other, there’s an apparent disapproval towards its ability to better society as a whole, therein rests the paradox that envelops the BIS‘s take on the subject.
Source: Cryptonews
