It always amuses me when somebody makes a set of arguments to justify his predetermined position. That's the case with the address given last week to the Hoover Institution by Agustín Carstens, general manager of the Bank for International Settlements in Basel, Switzerland. It was titled "Digital Currencies and the Future of the Monetary System":
The speech shows that the central banker simply wants to stop any form of money that is not controlled or issued by central banks.
Nowhere in this speech does Carstens address a big feature of the cryptocurrencies now circulating worldwide -- a limit to the units that can be issued -- other than to comment on the electricity use required to mine new bitcoins.
I cannot see why any sensible holder of bitcoin -- anyone who has some understanding of the value it gains from its scarcity -- is going to be attracted to a central bank digital currency that presumably has no limit on the amount that can be issued.
Carstens' speech has some strange remarks about citizen privacy and how expectations differ around the world. A strict reading of the speech implies that some loss of privacy is to be expected as central banks move to try to take over the digital currency field. Again, this is hardly an inducement to exit bitcoin and hold a central bank digital currency instead.
It seems that the BIS wants to stop or severely limit the use of bitcoin and the other cryptocurrencies. Is it possible that relatively soon a structured attack on bitcoin's value will be made, perhaps timed to coincide with a big story about some kind of fraud, to frighten people away from bitcoin? After such an event it might be much easier to pass legislation to prohibit private digital currencies.
So it seems prudent to keep clear of cryptocurrencies from now on.
Indeed, maybe bitcoin is being allowed to outperform the monetary metals lately so it to draws money before the attack.
The gold price is a little above $1,800 today, down substantially from recent days, even as bitcoin has been soaring lately, today being priced around $37,000. This anomaly is very suspicious in markets that almost magically seem to do what the monetary authorities want despite such extreme economic and fiscal policies, policies that even 10 years ago would have been seen as warnings of hyperinflation or some kind of government debt default.
Robert Lambourne is a retired business executive in the United Kingdom who consults with GATA about the involvement of the Bank for International Settlements in the gold market.