The Central Bank of Uruguay explained his position in relation to cryptocurrency and blockchain technology

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The Central Bank of Uruguay explained his position in relation to cryptocurrency and blockchain technology

The President of the Central Bank of Uruguay (BCU), Mario Bergara explained the position of the authorities and of the Central Bank in relation to cryptocurrency and blockchain technology. His speech was quoted by local news website Cripto247.

Markel spoke at the conference Blockchain Summit, which was held in Montevideo on 5 September.

In particular, the chief banker of Uruguay noted that the cryptocurrency should not be considered as currency. He also mentioned the problems faced by Central banks, dealing with new technologies.

About cryptocurrency Bergara said the following:

“Cryptocurrency is unstable. They can be anything, but they are volatile – today they cost $150 dollars the next day $1000, and so on. I want to say that we do not consider the bitcoin and other virtual currency as a real threat to national currencies.They lack characteristics that would enable them to function as currency. Are financial assets. And given its volatility is a risky financial assets”.

The banker explained that the volatility of the Fiat currencies are not comparable with the volatility of cryptocurrency. According to him, in the Fiat currency it is possible to understand why the price increases or decreases, which cannot be said about the virtual currency.

It also linked the virtual currency with the crime, noting that the kidnappers demand a ransom in bitcoin, because in his case, it is difficult to determine who received funds.

However, according to Bergara, technological innovation is not hostile to the financial industry. Bankers are extremely interested in the blockchain and the ways it can be used in the future to improve this industry. The security market requires that regulators have developed a decent legislative framework. Technology should be protected against such phenomena as terrorism financing and money laundering, not to help them.

About blockchain technology Bergara expressed this judgment:

“After a few years the paradigm of the blockchain will get more widespread. It is possible to speak about “the Economics of the blockchain”. You can talk about the “crypto economy”, in which there are mechanisms and their device. We analyze the incentives mechanism associated with decentralized protocols that define people’s behavior on digital platforms”.

Further, Bergara asked the audience, does it make sense to implement the blockchain in existing systems. For example, one of the most important applications of the blockchain technology associated with the rule “know your customer”. Through the implementation of technology in this aspect banks get rid of the need again and again to collect from customers the same information. In addition, the blockchain technology will allow banks to meet the regulatory requirements and carefully control who uses the platform and for what purpose.

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