President of Central Bank of Peru Criticizes Crypto

The Central Bank of Peru’s president, Julio Velarde, recently attacked the value of crypto and went on to criticize them because of the negative impact they have on the environment. Speaking with the local media in an interview, the president said that the bank did not regard bitcoin as a payment method. Instead, Velarde said that it was a very volatile financial asset that is primarily purchased by people because of this volatility risk. Sharing the considerations of the bank regarding cryptocurrencies, the official said that as opposed to fiat currencies, there are some defects in these new elements of the economy.

He was referring to the volatility associated with Bitcoin and the other cryptocurrencies. He also added that this was also the most attractive feature of cryptocurrencies and drove people to purchase and invest in them. According to Velarde, one of the reasons for the volatility of cryptocurrencies is their lack of intrinsic value. He said that this could lead to people losing interest in these digital assets and then their price would decline significantly. Verlarde added that there were also environmental concerns associated with cryptocurrencies because a lot of energy is consumed for mining them. He said climate change was now a problem because of cryptocurrencies as well.

He said that this was not very friendly for the environment. He said that mining bitcoin consumed enough energy to support a medium-sized country, which is a very massive amount. Apart from these criticisms, the president of the Central Bank of Peru also shared the progress the institution has made in regard to the development of their own digital currency. He elaborated that the bank was working on a document that was scheduled to be presented in about a month and a half. He said that in the coming days, they would have a meeting with the International Monetary Fund (IMF) and the Central Bank of India.

The president of Peru’s central bank was quick to compare these central bank digital currencies with cryptocurrencies and clarified that they were likely to have the support of central banks. As far as Peru’s CBDC is concerned, the executive said that in order to ensure growth, they need to give guidelines and also establish some parameters when it comes to regulation. He said that they did not know how this new geography of payments would work out in Peru.

The announcement about a central bank digital currency (CBDC) had come last year in November. Velarde had announced that the bank was developing a Peruvian digital currency that would be used for making payments. In addition, a law was introduced in December in Peru for regulating cryptocurrency transactions, along with the services provided by VASPs (Virtual Asset Service Providers). This is not the first central bank to be skeptical of cryptocurrencies and in favor of a CBDC. The Indian central bank has expressed similar sentiments and the current disagreement in Russia between its Finance Ministry and central bank are also the same, as monetary authorities do not consider crypto a safe mode of payment or investment.

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