Bitcoin [BTC] Critic Agustin Carstens warns against the issuance by central banks of virtual currencies

Crypto-currencies and the ecosystem of digital badets are often blamed for its long-term credibility and commercial functionality. Adding fuel to the fire, a leading Bitcoin [BTC] One critic noted the risks badociated with the issuance of their own virtual badets by central banks, which could have "huge operational consequences" and undermine monetary policy-making.

Agustin Carstens, Managing Director of the Bank for International Settlements, recently said that if central banks decide to launch their own cryptocurrencies, it will create a financial panic among citizens. Users would transfer their monetary holdings to accounts with a monetary authority with established banks, which would undermine the system.

He stated,

"The implementation of monetary policy has huge operational implications for central banks and implications for the stability of the financial system. Central banks are not holding back innovations for the sake of it. But neither should they go ahead ignoring all the traffic conditions. "

Agustin had previously compared the Bitcoin market to "a bubble, a Ponzi scheme and an environmental disaster".

He added that the other potential consequences of using Bitcoin would be its impact on interest rates, which in turn would affect the public's demand for money, which would result in an increase in banks' balance sheets. This could eventually end up affecting the liquidity of financial markets, he said.

The recent rise in crypto-popularity, the hyperinflation of fiduciary currencies in countries like Venezuela and the decline in the use of cash payments in countries like Sweden have raised concerns about the possibility of central banks are considering completing virtual tokens to replace their notes.

However, Christine Lagarde, Executive Director of the IMF, praised the digital tokens issued by central banks. She said

"I think we should consider the possibility of issuing digital currency. The state could have a role to play in providing money to the digital economy. "

JP Morgan Chase had previously announced the launch of the first stable newspaper under the control of a major bank earlier this year. JPM Coin, the coin was designed to settle payments instantly between customers and users of the bank.