Is Cryptocurrency the ‘Evil Spawn of the Financial Crisis’?

The European Central Bank’s (ECB) executive board member, Benoit Coeure, has made a rather controversial statement that could make a lot of people really angry and unhappy. Benoit called cryptocurrency the “evil spawn of the [2008] financial crisis.”

These polarizing remarks were made by Benoit at the Bank for International Settlements (BIS) in Basel. Most of his criticism was based on the decade old innovation’s emergence post the Lehman Brothers bankruptcy in fall 2008, which trigerred a global recession and forced state intervention.

Previously, the BIS’ general manager Augustín Carstens had made remarks of a similar nature when he called Bitcoin a “combination of a bubble, a Ponzi scheme and an environmental disaster.”

Benoit went on to say,

“Few remember that Satoshi [Nakamoto, the inventor of Bitcoin] embedded the genesis block with a Times headline from January 2009 about U.K. banks’ bailout. In more ways than one, Bitcoin is the evil spawn of the financial crisis.”

Benoit acknowledged the present day hype surrounding cryptocurrency tokens and distributed ledger technology (DLT) initiatives, but he remained rooted in his assertion that “a central bank digital currency, in whatever form, is unlikely to be issued within the next decade.” He also discussed the present day pursuit of crypto, by international monetary authorities.

On the other hand, Christine Lagarde, the managing director of International Monetary Fund (IMF) made promoted an opposite rhetoric at the Singapore Fintech Festival, Nov. 14, Lagarde advocated central bank-issued digital currencies (CBDC) and urged the international community to “consider” endorsing CBDC, claiming that they “could satisfy public policy goals,” specifically “financial inclusion.”

A survey by Official Monetary and Financial Institutions Forum (OMFIF) and IBM has actually shown that an increasing number of central banks are considering using CBDCs in the near future.  IBM’s Blockchain for Financial Services’ Chief Technical Officer, Stanley Yong also showed support for crypto by saying that CBDCs are “the only way” to mitigate the “kinds of risks that came about during the Lehman crisis of 2008.”