BIS Chief

Crypto “Lost the Battle” Against Fiat, Says BIS Chief

The debate surrounding the potential of cryptocurrencies to replace fiat currencies has been ongoing since the creation of Bitcoin in 2009. Over the years, proponents of digital currencies have touted them as the future of money, while critics have warned of their instability and potential for misuse. Now, Agustin Carstens, the head of the Bank for International Settlements (BIS), has weighed in on the issue, stating that crypto has lost the “battle” against fiat currency.

Carstens, a former governor of the Bank of Mexico, made the comments during a speech at the Hoover Institution on February 21, 2023. He began by acknowledging the achievements of digital currencies, such as their ability to facilitate cross-border payments and their potential to provide financial services to the unbanked. However, he went on to argue that these benefits are outweighed by the risks and limitations of cryptocurrencies.

According to Carstens, one of the key problems with cryptocurrencies is their lack of stability. Unlike fiat currencies, which are backed by governments and central banks, cryptocurrencies are not linked to any underlying assets or institutions. As a result, their value can fluctuate wildly in response to market speculation and manipulation.

Carstens also noted that cryptocurrencies have been associated with a range of illicit activities, including money laundering, tax evasion, and the financing of terrorism. While he acknowledged that these activities also occur with traditional currencies, he argued that cryptocurrencies are particularly well-suited to such activities due to their anonymity and decentralization.

Moreover, Carstens noted that cryptocurrencies are not widely accepted as a medium of exchange, and that they are not yet integrated into the global financial system. This means that even if individuals and businesses wanted to use cryptocurrencies for everyday transactions, they would face significant barriers in doing so.

Given these limitations, Carstens concluded that cryptocurrencies are unlikely to replace fiat currencies in the foreseeable future. He suggested that while digital currencies may continue to play a role in certain niche applications, such as cross-border remittances, they are unlikely to gain widespread adoption as a replacement for traditional currencies.

Carstens’ comments are significant because they come from the head of the BIS, an organization that serves as a central bank for central banks. The BIS has been at the forefront of efforts to regulate cryptocurrencies, and its opinion carries weight within the financial industry.

Reaction to Carstens’ comments has been mixed. Some cryptocurrency proponents have dismissed his remarks as out of touch, arguing that digital currencies are already being used for everyday transactions and that their adoption will only increase in the future. Others have praised Carstens for his pragmatism and his recognition of the challenges facing cryptocurrencies.

Regardless of one’s views on the potential of cryptocurrencies, it is clear that they have not yet achieved the level of mainstream adoption that many proponents had hoped for. While digital currencies have made significant progress in recent years, they still face significant challenges in terms of stability, regulation, and acceptance.

One potential factor holding back the adoption of cryptocurrencies is the lack of regulatory clarity surrounding their use. While some countries have taken a proactive approach to regulating digital currencies, others have been more cautious, with some even banning their use outright. This has created a patchwork of different regulatory regimes, which can be confusing and difficult to navigate for individuals and businesses looking to use cryptocurrencies.

Another factor limiting the adoption of cryptocurrencies is their volatility. While some cryptocurrencies have seen significant gains in value in recent years, others have experienced steep losses. This volatility makes it difficult for individuals and businesses to use cryptocurrencies as a store of value or a medium of exchange.

Despite these challenges, there are reasons to be optimistic about the future of cryptocurrencies. Many experts believe that as the technology underlying cryptocurrencies matures, they will become more stable and easier to use. Moreover, as more individuals and businesses begin to use cryptocurrencies, there may be a network effect that increases their value and adoption.

In addition, some countries are exploring the possibility of creating their own digital currencies, known as central bank digital currencies (CBDCs). These currencies would be backed by central banks, providing greater stability than existing cryptocurrencies. CBDCs could also potentially be integrated into existing financial systems, making them more accessible to individuals and businesses.

However, even CBDCs face challenges. For example, there are concerns around privacy and surveillance, as central banks would have access to information about individuals’ transactions. There are also questions around the potential impact of CBDCs on traditional banks and financial institutions.

Ultimately, the future of cryptocurrencies remains uncertain. While they have made significant progress in recent years, they still face significant challenges in terms of regulation, stability, and adoption. Whether they will ever replace fiat currencies as a mainstream medium of exchange remains to be seen.

Regardless of the outcome, it is clear that digital currencies have had a significant impact on the financial industry. They have forced traditional institutions to adapt and innovate, and have provided new opportunities for individuals and businesses to access financial services. Whether they ultimately succeed or fail, cryptocurrencies have already left a lasting mark on the world of finance.


The head of the Bank for International Settlements, Agustin Carstens, believes that cryptocurrencies have lost the “battle” against fiat currency due to their lack of stability, association with illicit activities, and limited acceptance. While he acknowledged the benefits of digital currencies, he argued that they are unlikely to replace traditional currencies in the foreseeable future.


  1. “BIS Annual Economic Report 2021,” Bank for International Settlements, accessed February 22, 2023,