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When compared to the central bank’s fiat money, Bitcoin resembles “a dimension of rare metals,” according to Governor Daz de León.
Alejandro Daz de León, governor of the Bank of Mexico, criticised Bitcoin’s (BTC) status as a trustworthy legal money, citing price volatility as a serious impediment to full-fledged acceptance.
Díaz de León said in a Reuters interview that Bitcoin’s position in today’s financial system resembles “a dimension of precious metals” when compared to the central bank’s fiat money.
In stark contrast to El Salvador’s mainstream Bitcoin adoption that requires businesses to accept payments in Bitcoin, Mexico’s central bank chief questioned Bitcoin’s position as a viable legal tender:
“Whoever receives bitcoin in exchange for a good or service, we believe that (transaction) is more akin to bartering because that person is exchanging a good for a good, but not really money for a good.”
When dealing with cryptocurrencies, Daz de León also emphasised the inherent risk of everyday price volatility. Coincidentally, the Salvadoran government witnessed this risk just one day after recognising Bitcoin as legal cash and purchasing its first 200 BTC, which were worth $10.4 million at the time of purchase.
Taking advantage of the situation, Salvadoran President Nayib Bukele announced the purchase of more Bitcoin during the dip, resulting in a total holding of 550 BTC. According to Bukele, this move saved his administration “a million in printed paper.”
Mexico’s central bank governor emphasised the importance of consistency in payment execution and value, adding that “people will not want their purchasing power, their wage to move up or down 10% from one day to the next.” You don’t want that kind of volatility in your purchasing power. In that respect, it is not a good value safeguard.”
As previously reported on June 28, officials from Mexico’s financial ministry issued a caution against institutional offerings involving digital currencies, emphasising the dangers associated with payments and value fluctuation.
The regulators have also said that no financial institutions in the country are authorized “to carry out and offer to the public operations with virtual assets,” including Bitcoin, Ether (ETH) and XRP.