Tech Giants ‘Invading the Currency Area’ Are The Real Threat, Not Crypto: Denmark’s Central Bank Governor
While Lars Rohde doesn’t see Bitcoin as more than a speculative fad, neighboring Sweden’s Riksbank First Deputy Governor, though “observant,” is not concerned about cryptos.
Bitcoin and cryptocurrencies are little more than a speculative fad, said Lars Rohde, Denmark’s central bank governor.
Rohde said he’s “tempted to ignore” Bitcoin and other crypto-assets. “It’s a very speculative asset at best. There is no stability and no guarantee from any side about the value of cryptocurrencies.”
According to him, central bankers can probably ignore cryptocurrencies as there are much more serious threats coming from big tech.
In an interview with Bloomberg, he said, if the tech giants start “invading the currency area” and the means of transaction, then “that could be very interesting and maybe also a real threat to the autonomy and independence of central banks.”
Similar warnings about the dominance of digital payments upending the age-old framework within which monetary policy has operated were given by Bank of England Deputy Governor Jon Cunliffe earlier this month. Pointing to the “financial stability implications” of such a development, he said governments and policymakers need to ensure they don’t get overtaken by private providers of payment services.
In response to such risks, central banks are working on their own digital currencies, with China in the lead and the US Federal Reserve looking to publish a paper on CBDC this summer. While Denmark isn’t among the frontrunners, neighboring Sweden may have a digital central bank currency within five years, per Riksbank Governor Stefan Ingves.
Meanwhile, Riksbank First Deputy Governor Cecilia Skingsley is “observant but not concerned” about financial market novelties like cryptocurrencies.
“Everyone can choose to invest in cryptocurrencies, but you should be aware that it’s very different from traditional financial assets,” said Skingsley while speaking at an online seminar on Thursday, adding she hasn’t seen “any crypto assets with an underlying real value.”
In Denmark, the main policy rate has been negative since mid-2012, longer than anywhere else in the world, which makes the main role of the central bank defending the krone’s peg to the euro.