Stressing the volatility of the digital assets market, Peru’s Central Bank President has, among other factors, stated that climate change and lack of value are negativities affecting the value of cryptocurrencies.
Referring to Bitcoin as a highly volatile financial asset, Peru’s Central Bank President, Julio Velarde, said the Country’s apex bank cannot consider bitcoin as a means of payment in the country.
According to the official statement, the Central Bank Chief stated that the new digital currencies introduced in the economy of some countries globally have major defects when compared to the well-known traditional currencies.
Peru’s Thoughts on Crypto
Sharing his opinions and thoughts in an interview with local media, Velarde maintained that the volatility of financial assets or cryptocurrencies is its attractive feature as traders and investors tend to buy these digital currencies because of the associated risk.
Stating his reasons categorically, Velarde cited concerns on environmental effects concerning the use of cryptocurrency. In his opinion, one of the major problems of cryptocurrency is climate change. He explained that the energy of a country depreciates or reduces in quantity as citizens of that country continue to mine cryptocurrency.
Another reason Velarde gave for the instability of the financial market is the lack of value of digital assets and cryptocurrencies. The choice and interest of consumers and investors greatly determine the value of crypto. If traders decide not to invest in a particular digital currency, the value and price of such currency can crash to their lowest minimum.
Peru’s CBDC
CBDC – Central Bank Digital Currency, is the initiative of the Central Bank of Peru. As an alternative to cryptocurrencies, Velarde revealed that the apex bank is making progress on the creation of digital currency that is capable of connecting them to future payment methods.
The CBDC, a futuristic digital currency project, is being carried out in conjunction with the Central Banks of India, Singapore, Hong Kong, and lots of other Central Banks in Asia.
Velarde maintained that the difference between the CBDC and other cryptocurrencies like Bitcoin and Ethereum is that the CBDC, just like the name implies, is supported by the Central Banks of all the countries involved in its creation.
However, the news of the creation of CBDC, which is still in its early stage, was received with mixed reactions by Peruvians. The county’s economic actors argued that the absence of a legal framework to sustain CBDC, coupled with the country’s unfriendliness towards cryptocurrencies, cannot guarantee the success of the project.
Velarde, in a quick move, countered the claims of the economists. Clarifying the issue, the Central Bank Boss revealed that the apex bank has presented a draft of the legal framework to regulate the activities of cryptocurrencies to the Peruvian Congress.
The drafted legal framework referred to as Cryptoasset Marketing Framework, if passed into law, will also regulate the activities of CBDC when it is successfully created. One of the provisions of the draft is the provision of access granted to the public registry of the various Virtual Assets Service Providers (VASP) in Peru.