Cryptocurrencies are speculative assets that in many cases allow criminal activity and “work against the public good,” said the Bank for International Settlements (BIS), the global body of central banks.

“It is clear that cryptocurrencies are speculative assets rather than cash, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes,” said the BRI in a report published on its website.

Bitcoin, the world’s largest cryptocurrency in particular, has “few redemptive public interest attributes when you also consider its unnecessary energy footprint,” he said.

Central banks around the world have been reluctant to approve cryptocurrencies due to their speculative nature, lack of value, and regulatory oversight. The Central Bank of the UAE also does not recognize cryptocurrencies as legal tender.

Stable coins can “fragment the liquidity of the monetary system and undermine the role of money as a coordinating device … ultimately [they are] only an appendage of the conventional monetary system and not a game changer, ”the BIS said.

Central banks are responsible for financial and monetary stability, the BIS said. Unlike Bitcoin and other unsupervised digital tokens, central banks are “responsible … [and] play a central role in payment systems “.

“In their roles as operators, supervisors and catalysts, [central banks] pursue key public policy objectives in the area of ​​payments: security, integrity, efficiency and access, ”added the BIS.

As regulators, central banks have multiple roles: providing the unit of account in the monetary system, providing the means to ensure the finality of wholesale payments using their own balance sheets as the ultimate means of settlement, ensuring the right operation of the payment system and oversee the integrity of the payment system, while maintaining a competitive playing field.

“In times of stress, the role of the central bank in providing liquidity takes on a more urgent form as a lender of last resort,” he said.

The BIS said central bank digital currencies (CBDCs) should be seen in the context of the functions of a monetary system regulator.

“Wholesale CBDCs are intended for regulated financial institutions. They build on the current two-tier structure, which places the central bank at the base of the payment system while assigning customer-oriented activities to PSPs (payment system providers). payment), “he said.

CBDCs are a form of digital currency, denominated in the national unit of account, which is a direct responsibility of the central bank. CBDCs can be designed to be used either by financial intermediaries or by the economy as a whole.

Central bank digital currencies can contribute to an open, secure and competitive monetary system that supports innovation and serves the public interest, the BIS said.

“CBDCs could form the backbone of a new, highly efficient digital payment system by enabling wide access and providing strong data governance and privacy standards based on digital ID,” said the BIS. “To realize the full potential of CBDCs for more efficient cross-border payments, international collaboration will be essential.”