European Union central bankers are becoming increasingly vocal on the subject of the world’s most popular cryptocurrency, bitcoin. Its precipitous price increase this year seems to coincide with wide-ranging statements, including the digital asset’s threat or lack thereof. Recently, the governor of the National Bank of Belgium (NBB) explained that more people should be warned about the decentralized currency and how it isn’t a currency at all.
Jan is Not a Bitcoin Fan
“We have to embrace the innovations and the efficiency gains that this can generate for the payment system,” NBB governor Jan Smets explained when asked about the possibility of a state-backed crypto for the Union. His answer came after a barrage of disparaging comments regarding cryptocurrencies’ market leader.
The NBB is Belgium’s central bank and part of the of the Eurosystem which comprise members of the European Central Bank. Mr. Smets, 66, has been its governor since 2015 after serving under two prime ministers as a cabinet chief. In addition to his NBB duties he participates in a dozen boards, academic and financial.
Quoted in De Vrije Markt, Mr. Smets explains, “We need to warn people about the bitcoin, and people who invest in bitcoins can lose a lot.” With its being woven into new financial products, the digital currency could potentially be catastrophic for wider economies due to its volatile nature. “Even if the risks are small at the moment,” Mr. Smets acknowledges.
Not a Coin
The last time a memorable statement was made by NBB regarding bitcoin came back in Summer of 2014 during a joint statement with its Belgian Financial Services and Markets Authority. In it, they warned about its not being legal tender, hacking, fluctuations and the usual litany of risks bitcoiners are all too familiar with. Prior to that statement, Belgium was thought to be at the forefront of crypto in Europe, at least in some circles.
Three and a half years laster, Mr. Smets worries about the purchasing power of the decentralized currency, pointing to its lack of stable backing such as that which the euro has with its tether to the European Central Bank. Bitcoin’s price moving from 1,000 USD at the beginning of 2017 to around 15,000 USD only buttresses his argument, he believes.
Finally, the EU central banker urges: “Let’s stop calling the bitcoin a coin. Unlike the euro, the bitcoin is not guaranteed by a central bank or government as a means of payment, so the bitcoin is not a currency,” he explained.