The erstwhile top honcho of the European Central Bank, Jean-Claude Trichet, said he was skeptical whether cryptocurrencies could ever become money's future, becoming the first financial official to dump cold water on the popular digital asset.
"I'm strongly opposed to bitcoin, so I feel we're a little complacent," Trichet said on Sunday in Beijing during a panel discussion at Caixin's 10th annual conference. "The cryptocurrency itself is not actual, with a currency's characteristics."
Buying a cryptocurrency was "pure speculation in many aspects," said Trichet, who headed the ECB as Bank of France's governor from 2003 to 2011, after a decade. "Even if the crypto is meant to be focused on underlying assets, I'm watching a lot of hype. It's not safe."
Trichet's statement reinforces the fear expressed by global central banks about the threat posed by cryptocurrencies, regarding their decentralization of traditional currencies, fragmentation of the global financial system, and currency hindrance in regulating the value of money.
Benoit Soeure, a board member of the ECB, went as far in September as warning that cryptocurrencies could "challenge the US dollar's dominance," in a CNBC article.
The 76-year-old French economist said at the conference that he was also "very much against" Libra, Facebook's version of the crypto.
Originally announced with a roster of corporate backers, the social media site attracted criticism as it penetrated the domain for financial services, prompting firms such as Visa, MasterCard, and PayPal to pull funding in October.
Cryptocurrencies are virtual assets that are distributed and exchanged without a central bank or manager. Transactions between users were registered in a virtual blockchain database without the conventional middle man.
China's stand against cryptocurrencies has been strong. In September 2017, China's central bank and financial regulators barred initial coin offerings (ICOs) where businesses can raise funds through the issue of digital tokens or coins.
Local trading sites were shut down and in February 2018, in efforts to quash the sector, exposure to all domestic and foreign websites relevant to cryptocurrency trading and ICOs was blocked.
Chinese banks are prohibited from managing bitcoin or any asset, even though people are not stopped from owning them. China operates some of the largest blockchain and bitcoin mines in the country.
Bitcoin is the first and most famous cryptocurrency in the world, created in 2009 by an anonymous programmer, Satoshi Nakamoto, recognized as "what is generally assumed to be a pseudonym."
Bitcoin's value has moved from $0.003 in March 2010 to a historic $20,000 at the end of 2017, until collapsing the next year, closing at around $8,800.
