The substantial growth of the cryptocurrency sector in the past year has caught the eye of central bankers. The latest to opine on the matter and, somewhat expectedly, to dismiss the industry’s chances of actually disrupting the centuries-old financial space was the governor of Denmark’s central bank.
Crypto Is Speculative Fad
During a recent interview with Bloomberg, Lars Rohde, the governor of Danmarks Nationalbank, took a few stabs at the cryptocurrency sector. Despite their recent growth and the total market capitalization’s 10x increase in a year, the central banker still remains skeptical by calling the industry “speculative fad.”
As with most of his colleagues, Rohde outlined the infamous volatility and lack of a central authority as the primary reason for his dismissal. Consequently, he noted that he is “tempted to ignore” BTC and the rest of the market.
“It’s a very speculative asset at best. There is no stability and no guarantee from any side about the value of cryptocurrencies.”
While deriding crypto’s chances of disrupting the financial space, the central banker highlighted a challenge coming from fintech companies. If large tech firms, such as Facebook’s Diem attempt, decide to invade the “currency area,” it could be “very interesting and maybe also a real threat to the autonomy and independence of central banks.”
Central Bankers Going After Bitcoin
The trend of chairpersons and governors from central banks bashing the primary cryptocurrency is nothing new. It only intensified in the past several months as the value of the asset skyrocketed to new highs, and it entered the scope of larger institutions.
The Chairman of the Federal Reserve, Jerome Powell, has repeatedly questioned BTC’s merits. In one of his latest rants, he dismissed bitcoin’s potential to serve as a store of value and medium of exchange due to its enhanced volatility.
Andrew Bailey, the governor of the Bank of England, sees significant risks for people investing in the cryptocurrency space as it “has no intrinsic value.” As such, he warned potential investors to be prepared to lose all of their money.
Citing some of the reasons mentioned above, namely the volatility and lack of central authority, the ECB President, Christine Lagarde, said no central bank will ever hold bitcoin or any other digital asset.
Featured Image Courtesy of Bloomberg