By Hannah Perez
The governor of the Bank of Mexico (Banxico), Alejandro Diaz de Leon, believes that Bitcoin
(BTC) is not real money.
In an interview with Reuters
, the current leader of Mexico’s central bank ruled out the recognition of the flagship cryptocurrency as legal tender. The representative of the monetary authority presented several counter-arguments, including assuring that the cryptocurrency could not be considered money because it did not represent a reliable method of payment.
The comments suggest that Mexico does not plan to follow in El Salvador’s footsteps in adopting Bitcoin as legal tender. As DiarioBitcoin reported, on Tuesday of this week the Bitcoin Law went into effect in that country, which grants the cryptocurrency legal tender status. As a result, banks, merchants and businesses in that country have been working to integrate the cryptocurrency
is not money or a store of value asset
Diaz de Leon questioned Bitcoin’ s position as a legal currency citing the digital asset’s high volatility. Among his arguments, he also highlighted that the use of cryptocurrency as a means of payment is more akin to barter than to fiat money issued by central banks, which he labeled as “evolved
“In our times, money has evolved into fiat money issued by central
,” the Banxico governor commented to Reuters
Whoever receives bitcoins in exchange for a good or service, we think [the transaction] is more like barter because that person is exchanging a good for a good, but not really money for a good.
Regarding the inherent price volatility of the cryptocurrency market, Mexico’s central bank governor pointed to the need for reliability in terms of payment execution and value. He stated that “people will not want their purchasing power, their salary to go up or down 10% from one day to the next .They don’t want that volatility
for purchasing power“.
Diaz de Leon also argued against the potential of Bitcoin as a store of value asset. While he admitted that the place of Bitcoin in the current financial system resembles “a precious metals dimension,” suggesting a similarity between gold’s use with that of cryptocurrency, the leader dismissed this option due to high price fluctuation. “In that sense, it’s not a good safeguard of value,” he said.
Bitcoin will collapse, Swedish central bank governor warns
This week, Bitcoin it recorded a remarkable price fluctuation. On Tuesday, the asset hit highs above USD $52,700 before plunging USD $9,000 lower in less than 24 hours. The government of El Salvador witnessed volatility on its first day of adoption of Bitcoin with the purchase of 200 BTC before witnessing the fall.
The leading cryptocurrency hit record highs above USD $64,000 in May, but plummeted more than 50% from that record in July. As of press time, the cryptocurrency continues the recent downtrend, trading around USD $45,000.
Mexico’s financial authorities have made similar arguments against Bitcoin in the past. In late June, Mexico’s Finance Minister Arturo Herrera warned that cryptocurrencies are not legal tender assets nor are they treated as currencies within the country’s regulatory framework. At the time he also highlighted risks related to payments and value fluctuation.
Other central banks have also been quick to warn about digital currencies this week following the adoption of Bitcoin in El Salvador. At a banking conference in Stockholm, the governor of Sweden’s central bank (Sveriges Riksbank), Stefan Ingves, also dismissed the Bitcoin as legal tender.
In his speech Ingves admitted that there was money to be made by investing in Bitcoin. He compared this investment to buying stamps and assured that the flagship cryptocurrency will collapse “sooner or later.”
Version by Hannah Estefania Perez / DiarioBitcoin
Image from Unsplash