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Saturday, February 4, 2023

President of Central Bank of Peru Criticizes Crypto – Citing Lack of Intrinsic Value and Climate Change

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President of Central Bank of Peru Criticizes Crypto – The president of Peru’s Central Bank, Julio Velarde, slammed the value of cryptocurrencies and alluded to their alleged detrimental impact on the environment.

Velarde stated in a recent interview with local media that the Bank does not consider bitcoin to be a payment method. Instead, Velarde described it as a “highly volatile financial product” that investors buy to protect themselves against the danger of volatility.

Julio Velarde, the head of Peru’s Central Bank, recently offered his thoughts about cryptocurrencies as well as the bank’s concerns. According to the official, these new economic features had several flaws when compared to their fiat counterparts.

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Also Read: President Lukashenko Signs Decree to Create Crypto Wallet Register in Belarus

Velarde first mentioned bitcoin and other cryptocurrencies’ volatility, calling them “very volatile financial assets.” This, according to Velarde, is the appealing aspect of cryptocurrency since users and traders buy it because of the risk.

According to Velarde, one of the reasons for this instability is the assets’ lack of inherent value. “People may lose interest in possessing it,” he added, “and then the price can plummet to anything.”

Velarde also stated that there are environmental problems with the use of cryptocurrencies, claiming that their energy use is a problem. Velarde stated:

Climate change is the current issue with bitcoin. It is the least environmentally friendly. Mining bitcoins consumes enough energy to power a medium-sized country. These are huge sums of money.

Velarde also presented an update on the institution’s progress in developing its own digital currency. After meeting with the Central Bank of India and the International Monetary Fund, he claimed that the bank is working on a paper that will be submitted in a month and a half.

The president of the central bank was quick to compare these digital fiat alternatives to cryptocurrencies, emphasizing that they will have central bank support. 

Also Read: The 5 Most Sustainable Cryptocurrencies for 2022

The executive expressed the following about the CBDC’s development in Peru:

I believe that the road we must take is one in which we steer growth by providing guidelines and establishing some regulatory parameters. We have no idea how the new payment geography will be implemented in Peru.

Last November, Velarde said that the bank was developing a Peruvian digital currency aimed at payments. In December, a regulation was established to control cryptocurrency transactions and the conduct of VASPs (virtual asset service providers) on Peruvian soil.

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