The President of the Central Reserve Bank of Peru (BCRP) believes that cryptocurrencies pose a threat to the planet because of their attractiveness to investors.
The head of the Central Bank, Julio Velarde, said that digital currencies, in comparison with their fiat counterparts, have too significant drawbacks. The volatility of cryptocurrencies makes them a very attractive investment tool and at the same time creates serious risks for investors and the global financial system.
The head of the Central Bank also drew attention to the environmental problems associated with the use of cryptocurrencies, such as the carbon footprint and high energy costs:
“The problem with cryptocurrency right now is climate change. Bitcoin is the least environmentally friendly. Bitcoin miners consume the energy of a medium-sized country.”
The head of BCRP said that Peru was able to achieve serious success in the study of digital currencies of the Central Bank. The Central Reserve Bank of Peru is currently working on a document describing the functionality of the state digital currency. The document should be released a month and a half after the meeting of the Central Bank of Peru, the Central Bank of India (RIB) and the International Monetary Fund (IMF) scheduled for the next few days.
Velarde said that state digital currencies are better than cryptocurrencies, as they are supported by central banks. In his opinion, the CBDC study is exactly the direction in which the Central Bank of Peru should develop, creating benchmarks and establishing regulatory rules for digital assets in the country. At the same time, BCRP does not yet understand how the gradual introduction of digital assets into the financial system will affect the country’s economy.
Back in 2020, regulators in Peru began to study the activities of cryptocurrency companies and marketplaces in order to develop clear regulatory requirements that control the digital currency industry. Last year, President Julio Velarde announced that the Central Bank of Peru is working with the Central Bank of India and Singapore to develop its own cryptocurrency. Recently, the Latin American Private Investment Association (LAVCA) reported that over the past year, the amount of investment in the cryptocurrency industry has grown almost 10 times compared to 2020 and reached $653 million.