The head of Bank for International Settlements (BIS), Agustin Carstens, has shown some rejection to cryptocurrencies, both as a technological development and as an economic solution.
He is one of the fiercest critics of the cryptocurrencies. Earlier this year, he said that bitcoin and altcoins are “a bubble, a Ponzi scheme and an environmental disaster”.
In an interview with the Swiss-German newspaper Basler Zeitung, Carsten insisted that the revolutionary financial instrument was “a fraud”. After which, he almost asked in the form of a plea to the “children” who promoted him: “Stop trying to create money!”.
“Even the legendary scientist Isaac Newton tried –and failed– to create money out of nothing,” he said. “And young people should learn from his mistake,” said the newly appointed BIS General Manager.
For him it would be enough to look back to the past to realize that creating gold or money out of nothing has been a common obsession. That never worked. That even the great physicist Isaac Newton was at one point in his life obsessed with alchemy and the idea of making gold. As such, Newton was very successful in several fields, but failed in this one, Carsten argues.
Newton, who ended up at the head of the British Mint, managed to get there because he could immediately detect if a coin was counterfeit. So after failing to create gold, he switched sides and sent the counterfeiters to prison. For Carsten, he believes that this could be the same destination for the now millions of new “Newtons” who are now enthusiastic about bitcoin and the other cryptocurrencies.
The BIS general manager added that he is concerned about the pace of technological progress. He advised young people to focus their efforts on better activities, rather than on an asset class that “serves none of the… purposes of money”.
Because he believes that young people should use their many talents and skills for innovation, not for reinventing money. He concluded that it is a fallacy to think that money can be created out of nothing.
Finally, Carstens argued to the Basler Zeitung that central banks are ‘trusted' and that at least at the moment there is no viable substitute for their role in the world economy.
“I can't imagine anything coming soon that will be more efficient and generate the same level of trust,” he said.
While it may be true to take a few points from his speech into consideration, Carstens's critique falls extremely short of the astronomical adoption growth of bitcoin and blockchain technology every day.