Two central bank governors have divided their views on Bitcoin after the cryptocurrency became legal tender in El Salvador. The governor of the Bank of Mexico views bitcoin as a high risk investment and a poor store of value, while the governor of Sweden’s central bank, the Riksbank, believes Bitcoin could collapse.
Central bankers continue to warn against Bitcoin
The governors of the Bank of Mexico (Banxico) and the Swedish central bank, the Riksbank, shared their views on Bitcoin after the cryptocurrency became legal tender in El Salvador.
Bank of Mexico Governor Alejandro Diaz de Leon said Thursday that Bitcoin was more of a medium of exchange than fiat money, Reuters reported, adding that he called the cryptocurrency “a high risk investment and poor store of value.” The governor of Banxico is an economist; He was appointed governor of the central bank by the Mexican president until December 31st. He was quoted as saying:
Whoever receives Bitcoin in exchange for a good or a service, we believe that this is more like a barter, as that person is exchanging a good for a good, but not actually money for a good.
“In our time, money has evolved into fiat money, which is issued by central banks. Bitcoin is more of a dimension of precious metals than an everyday legal tender, ”he continued.
His comments suggest that Mexico will not be adopting Bitcoin as its national currency as soon as El Salvador did. The Salvadoran Bitcoin law went into effect on September 7th and BTC is now legal tender alongside the US dollar.
The head of the Bank of Mexico argued that in order for a cryptocurrency to be considered money, it must be a reliable method of payment. However, he said that cryptocurrencies are very volatile and noted that their values often fluctuate wildly on a daily basis. The governor of Banxico stated:
People will not want their purchasing power, their wages, to increase or decrease by 10% from one day to the next. You don’t want that volatility for purchasing power. In this respect, it is not a good value protection.
Meanwhile, the Governor of the Swedish Central Bank, Stefan Ingves, compared buying and selling Bitcoin to private labels. Bloomberg reported Thursday that it spoke out on Bitcoin at a banking conference in Stockholm, warning that the cryptocurrency could collapse.
Ingves is also an economist. Previously, he was Chairman of the Basel Committee and Director of the Monetary and Financial Systems Department at the International Monetary Fund (IMF). He was quoted as saying:
Private money usually collapses sooner or later. And sure, you can get rich trading Bitcoin, but it’s similar to trading postage stamps.
The Riksbank governor previously said that Bitcoin and other cryptocurrencies are unlikely to escape regulatory oversight if their popularity grows.
What do you think of the comments made by the two central bankers? Let us know in the comment section below.
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