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The president of the Banco Central del Uruguay (BCU), Mario Bergara, who was present at the Blockchain Summit in Montevideo last Wednesday, said that “we can hardly think that cryptos are currencies.”
He explained to the local media that cryptos are not currencies because of the lack of institutional validation and because they lack the requirements of traditional currencies.
“Cryptocurrencies are not stable. They are anything but stability. They can be worth 150 dollars the next day 1000 and so on…We don’t see Bitcoin and other cryptos as a real threat to national currencies. It does not have the characteristics necessary for them to operate as currencies. They do operate as financial assets. And they have to be considered, because of their volatility, as risky financial assets.”
“The volatility of currencies is incomparable with cryptos. In the fiat, you can find out why the price goes up or down. That in Bitcoin, the fundamentals, are not known. Maybe the price went down because of something that happened in China… But you don’t know”.
He also criticized its use for cybercrime and hacking: “Now the kidnappers are asking for a reward in Bitcoin because it is not traceable”.
Against Crypto, In Favor of Blockchain
Like many at the event, Bergara spoke in favor of blockchain technology. He argued that innovation is not contrary to the traditional financial industry. “It’s not banks versus innovation. We’re interested in understanding what’s going on and it helps us understand what our role as regulators is,” he said.
He added that in his opinion the Central Bank has to regulate technology. He said:
“There are opportunities and challenges. We must protect non-sophisticated agents because systemic risks can increase. These are still present so regulation is imperative.”
However, Bergara was conservative and stressed: “When you let the system innovate too much, it ends up exploding.”
As for the pilot test that Uruguay did in relation to the epeso, the country’s attempt at a state cryptocurrency, he said:
“The central bank currencies are also challenged to be digital. The forms changed over time. Why not have the same currency with electronic support?”
Finally, for Bergara, a potential application to adopt is a Know Your Customer (KYC) blockchain protocol that some banks already have.
“Maybe it can be used so that banks don’t have to ask for the same information from the same person every time.”