The Bank for International Settlements (BIS) has released a report to finance ministers of the world’s twenty largest economies, citing inherent structural flaws of crypto that make it unsuitable as a monetary tool. Despite the millions of investors getting involved in the sector, the report states that crypto has so far failed to harness innovation to the benefit of society and remains largely self-referential and does not finance real economic activity. The report comes after a turbulent year for crypto, citing losses from the collapses of FTX and of the Terra ecosystem, the risk of hacks and rug pulls, and the problems of scaling to become the size a full-on payment system will need. Central bankers’ skepticism about crypto is nothing new, given fears that new payment systems could disrupt or displace the traditional fiat currencies they issue. Members of the G20 appear to be cautious about encouraging stablecoins, cryptocurrencies tied to the value of fiat currencies, since the effect on centralized monetary policy can be even more pronounced in emerging markets.
BIS Report Cites Inherent Structural Flaws of Crypto as Unsuitable Monetary Tool
