While Bank of England Governor and Financial Stability Board chair Mark Carney may not see cryptocurrencies as an immediate threat to the global financial system, the head of Brazil’s central bank still sees plenty of reason for concern.
In remarks to Folha de Sao Paulo, a Brazilian newspaper, ahead of the 2018 G20 Summit in Buenos Aires, Ilan Goldfajn articulated that cryptocurrencies still lack the stability needed to be a safe and legitimate exchange of value.
Rather, Goldfajn noted that he prefers to think of them as “crypto-assets” rather than “cryptocurrencies.”
“ I don’t refer to them as money because money has to have stability in its value and be able to facilitate payments,” he explained. “I see them more as an asset, and a risk, because they don’t have the support of a central bank.
The topic of cryptocurrencies is on the docket for several summit meetings this week, presumably where regulatory aspects will be discussed. Goldfajn explained that the goal will be to “look at what each country is doing and what are the benefits, because all of us are in favor of the technologies.”
He also reiterated warnings of the potential use of cryptocurrencies for financing illicit activities. While the extent to which bitcoin and other large-cap cryptocurrencies are being used in this manner at a global scale appears, he explained that the risk, however small that may be, of that occurring in Brazil’s borders is too large to tolerate.
“We cannot show complacency in regards to tax evasion and money laundering,” he emphasized. “If this new channel were to be used for these purposes, we must act how we act in response to other illicit movements.”
“The volatility of this activity, it can increase greatly and it can decrease greatly, there will be no one that can secure that. If anyone is thinking about selling their house to purchase cryptocurrencies, I would say that the risk is enormous .”
It wasn’t the first time that Goldfajn, who oversees the ninth-largest economy in the world in 2016 – per the World Bank, has cast a skeptical view toward cryptocurrencies. Last December, he made headlines by claiming that bitcoin has all the facets of a “pyramid scheme” in which the objective is to buy and then sell off at a higher price.
“This is not something us regulators should incentivize,” he said at the time, according to the Brazilian publication Exame.