BIS official: Bitcoin failed as a means of payment

Bitcoin has failed as a currency due to high volatility, said Benoît Cœuré, head of the BIS Innovation Hub, in an interview with Bloomberg.

The financier acknowledged that cryptocurrency “has found its place,” but there is a need for a central bank digital currency (CBDC), which will be used for payments.

Bitcoin can be an “investment instrument,” but he did not define a role for the asset, Cœuré added.

In his view, there is no CBDC race, as they will perform different roles in different countries:

“I would not say so. All countries are different. If you look at China’s project, it is very domestic. It really fits their financial system and the way they operate and want to regulate it… Each state will go its own way. In this sense I do not think there is an advantage to being a pioneer.”

CBDC competitors are likely to be digital currencies issued by large technology companies, so there is a need to develop common rules, Cœuré argues.

“We need to draw a map so that everyone can set off on their own journey,” — he said.

Facebook has confirmed its intention to launch the digital currency Diem (formerly Libra) in 2021. At the same time, Microsoft President Brad Smith believes that companies should not issue currencies, and leave this mission to the state.