During the Bank for International Settlements (BIS) annual conference, Fabio Panetta noted that the acceptance of cryptocurrencies among investors as a “reliable means of savings” began to erode in late 2021. During 2022, the capitalization of the crypto market collapsed by more than $1 trillion, and the “highly volatile” nature of digital assets, more suitable for gambling than investment, became clear to all.
“Because of their limitations, cryptocurrencies have become not an innovative and reliable form of finance, but a pernicious. The cryptocurrency ecosystem is riddled with failures and prone to negative externalities. It is bound to continue to encounter failures and problems if the right regulatory measures are not taken.. That said, policymakers should be cautious about supporting an industry that has so far failed to benefit society but is trying to integrate into the traditional financial system in order to gain legitimacy as part of that system and use it,” Panetta said.
The official also stressed that participants in the cryptocurrency industry are constantly coming up with new “narratives” to attract investors, but almost always fail them and fail to deliver on their promises.
Panetta questioned the benefits of blockchain, saying that the “security, scalability and decentralization” of cryptocurrency transactions “cannot be achieved,” and blockchain’s immutability is a disadvantage because it is impossible to undo a transaction. He also recalled the collapse of the FTX exchange.
Previously, the ECB board member has repeatedly spoken out against cryptocurrencies and investments in this asset class.
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