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Monday, October 18, 2021

Digital assets are dangerous: says Bank of Mexico governor

According to the head of the Mexican Central Bank , the Bitcoin (BTC) is not a practical electronic currency for trade. According to him, it has no real value. He believes that digital currencies do not have the same values ​​as other currencies and that they are closer to precious metals than to currencies.

A high risk investment

Contrary to what supporters of Bitcoin (BTC) tout , it is not a scalable currency, insisted Alejandro Diaz de Leon , the governor of the Bank of Mexico.

“Anyone who receives Bitcoins in exchange for a good or a service, we think that this (transaction) is more akin to bartering , because that person is exchanging a good for a good, but not really money for a good, ” said the banker.

He also added that digital currencies represent a high risk investment and a poor store of value. Mr. Leon holds the remarks at a time when many countries are taking important steps in order to allow payments digital currency. The country that ranks at the top of the list among these countries is El Salvador, which has definitely introduced BTC into its financial system.

People won’t want their wages to drop by 10%

Outside of El Salvador, Panama is exploring the possibility of making BTC legal electronic currency. Although Mexico also seemed to be in favor of such a project, the country will surely have to revise its plans because of the governor’s latest remarks. In his statements, the latter also said: “Bitcoin is more like a dimension of precious metals than a daily legal tender.”

According to the governor, for BTC to have any chance of becoming legal tender, it must still prove itself and preserve its value . Indeed, like other digital assets , it experiences high volatility and its values ​​oscillate uncontrollably, which makes it unsuitable for use as a means of payment, considers the governor. (Also Read: US treasury wants official stablecoin verification)

“People will not want their purchasing power, their salary to increase or decrease by 10% overnight. You don’t want this volatility for purchasing power. In this sense, it is not a good protection of the value ”.

While many countries are taking steps to include cryptocurrencies in their economic arsenal, Mexico seems to be taking a step backwards. Indeed, the governor of the Bank of the country explained that according to him digital assets are dangerous.

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