Many central bankers think it’s absurd that bitcoin could replace money at some point, but there are some who believe it may dominate in the future.
News that Norway has the lowest cash flow in its economy has sparked a new round of discussions about bitcoin and whether it could replace central bank-managed money, or even whether the latter could create their own cryptocurrencies – although some central bankers call bitcoin a “bubble”.
Speaking on the issue, the Governor of the Central Bank of Norway, Oystein Olsen, said that citizens should not bet on bitcoins as an alternative, adding that he considers it unthinkable for bitcoin to replace the money managed by central banks. “Bitcoins need too many resources, they cost too much and – most importantly – they do not guarantee stability,” Olsen said in an interview. “The main concern of a central bank and the currency it manages is to provide stability in terms of the value of money in the system, and that is something that is not done with bitcoin.”
The statements of the Norwegian central banker came shortly after the statements of one of the most powerful businessmen in the country, Kjell Inge Rokke, who estimated that at some point “bitcoin will end up on the right side of history“, adding that one day is not ruled out “A bitcoin worth many millions of dollars“.
The big banks disagree on bitcoin
And while these are located in Norway, the major banks around the world express different views on bitcoin. Citigroup, in a 108-page analysis, said bitcoin “may be in an ideal position to become the preferred currency in world trade.” However, he expressed concerns about the capital gains, insurance and security as well as the environmental footprint of cryptocurrencies, concluding that “developments in the near future are likely to be decisive as the currency is on the verge of acceptance by the established or its collapse “.
Then came Bank of America and Morgan Stanley Wealth Management. “The overall returns of bitcoin this year are already among the highest in its short history,” said BofA’s chief analyst. However, it stressed its serious concerns about the environmental footprint of cryptocurrencies, noting that the annual energy consumption of bitcoin is similar to that of the Netherlands due to the energy-intensive process of “mining” new currencies. BofA analysts also noted that bitcoin is not a suitable means of covering inflation.
Morgan Stanley Wealth Management investment manager Lisa Shalett said last week in a report that cryptocurrencies are on the verge of becoming an investment category. She said the evolving regulatory framework, improved liquidity conditions and growing interest from institutional investors have created the conditions for cryptocurrencies to be included in institutional investors’ portfolios, as was the case with gold 45 years ago. “Our recommendation is to educate investors and consider how and when to expose themselves to this explosive asset class,” Shallett said.
Meanwhile, US Federal Reserve Chairman Jerome Powell said on Monday that cryptocurrencies were more suitable for speculation than for payments, while Germany’s Commerzbank said bitcoin was not worth analysing, calling it purely profitable. asset. Also, the French portfolio management company Amundi published its first analysis of cryptocurrencies on Monday, with the deputy chief investment officer warning of a possible violent price correction after the rules were set for them by the major supervisory authorities.
Banks are making their own digital currencies
The rise of bitcoin as well as other cryptocurrencies has alarmed central banks around the world, which are rushing to respond to the rapid disappearance of money by developing their own digital currencies before cryptocurrencies dominate.
Sweden and China are considered pioneers in the development of digital currencies, as they are already launching collaborations with technology experts to create a digital currency that could be easily controlled by central banks.
As for bitcoin, which some central bankers call a “bubble”, its price has risen by about 900% in one year. In fact, today one of his fans, the billionaire founder of Tesla, Elon Musk, took care to give it a further boost. “Now you can buy a Tesla with bitcoin. “Bitcoins paid to Tesla will be retained and not converted into banknotes,” Musk wrote on Twitter, raising the price of the most popular currency by 3% to $55.444.