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  4. Cathie Wood says central banks might add crypto to their balance sheets. Here's the list of bitcoin-skeptic central bankers who think otherwise.

Cathie Wood says central banks might add crypto to their balance sheets. Here's the list of bitcoin-skeptic central bankers who think otherwise.

Harry Robertson   

Cathie Wood says central banks might add crypto to their balance sheets. Here's the list of bitcoin-skeptic central bankers who think otherwise.
CryptocurrencyCryptocurrency4 min read
  • Cathie Wood said emerging market central banks may start adding bitcoin to their holdings.
  • But central bankers around the world have, by and large, been very pessimistic about crypto.
  • From Argentina to the UK, central bank bosses have warned the assets are highly risky.

Superstar investor Cathie Wood said on Thursday central banks in emerging markets could add cryptocurrencies to their balance sheets to protect against the effects of deflation as the economic boom cools.

She told CoinDesk's Consensus event that emerging market central banks - and maybe even the eurozone - could well start holding hard assets like bitcoin "because they know their currencies are going down, and that they will be under attack as reserves go down."

Yet central bankers have by and large been dismissive of crypto, including those in emerging economies such as India.

Hours before Wood's comments, Japan's central bank chief expressed doubts about bitcoin's uses and called the asset "speculative."

"Most of the trading is speculative and volatility is extraordinarily high," Bank of Japan Governor Haruhiko Kuroda told Bloomberg on Thursday. "It's barely used as a means of settlement."

This is what other central bankers think about cryptocurrencies:

Reserve Bank of India Governor Shaktikanta Das

Das said in February he was concerned that cryptocurrencies could threaten financial stability in India.

He told CNBC TV-18 the central bank had told the government about these "major concerns."

India's central bank moved to ban banks from handling cryptocurrency transactions, although the Supreme Court later struck down the rule in March. Asia's third-largest economy has considered banning cryptocurrencies altogether.

People's Bank of China Governor Li Bo

Li said in April bitcoin is an "investment alternative," which encouraged many in the crypto community.

"We regard bitcoin and stablecoin as crypto assets ... These are investment alternatives," he said at a panel hosted by CNBC. Yet he said they "are not currency per se" and added that he had doubts about their role in the real economy.

However, the PBoC has a history of acting tough on crypto. It renewed its crackdown on banks accepting cryptocurrencies as payments in May, triggering a plunge in bitcoin.

Central Bank of Argentina

The central bank in Argentina - which is a country prone to currency crises - warned its citizens earlier in May about the risks of cryptocurrencies, in a joint statement with the securities regulator.

It said crypto assets aren't legal tender and "can cause significant financial losses for its holders, including the possibility of losing the totality of the resources invested."

Bank of England Governor Andrew Bailey

Bailey had words of warning on cryptocurrencies at the BoE's latest monetary policy meeting. "I would only emphasize what I've said quite a few times in recent years. I'm afraid they have no intrinsic value," he said.

"Now that doesn't mean to say people don't put value on them, because they can have extrinsic value. But they have no intrinsic value."

Bailey added: "I'm sorry, I'm going to say this very bluntly again: buy them only if you're prepared to lose all your money."

The Governor said later in May the rise in bitcoin was a warning sign. "You've probably seen all the stories about the price of bitcoin," he said at a Bank of England event.

"That's a warning sign. People are looking for investment opportunities. Buy it if you want, but it has no intrinsic value."

Federal Reserve Chair Jerome Powell

Powell made a similar point to Kuroda in April, saying bitcoin and cryptocurrencies are for speculation.

"They're really vehicles for speculation," he told the Economic Club of New York. "They're not really being actively used as payments."

In March he compared cryptocurrencies to gold. "They're highly volatile and therefore not really useful stores of value and they're not backed by anything," Powell said at a Bank for International Settlements event.

"It's more a speculative asset that's essentially a substitute for gold, rather than for the dollar."

European Central Bank President Christine Lagarde

Lagarde said she doesn't think bitcoin is a real currency - a view shared by most central bankers - in February, adding that central banks would not start holding cryptocurrencies.

"It's very unlikely - I would say it's out of the question," Lagarde said at a virtual event hosted by The Economist.

She had been even more downbeat in January, saying bitcoin "is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity."

The ECB boss called for more regulation that "has to be applied and agreed upon… at a global level."

ECB Vice President Luis de Guindos

Lagarde's deputy expressed similar skepticism towards cryptocurrencies in May, saying bitcoin isn't a real investment.

"When you have difficulties to find out what are the real fundamentals of an investment, then what you're doing is not a real investment," Guindos told Bloomberg TV. "This is an asset with very weak fundamentals and that is going to be subject to a lot of volatility."

However, the ECB said in its Financial Stability Review in May bitcoin does not pose much of a risk to the financial system.

Danmarks Nationalbank Governor Lars Rohde

Rohde stuck to the central banker line on Thursday, telling Bloomberg that bitcoin is "a very speculative asset at best."

He said: "There is no stability and no guarantee from any side about the value of cryptocurrencies." Rohde added that he's "tempted to ignore" cryptos.

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