Central bank-issued digital currency is the future, not cryptocurrency, economist says - CNBC

October 31 2017

  • Digital currencies issued by central banks will make transactions more efficient, economist Barry Eichengreen told CNBC
  • But he said cryptocurrencies like bitcoin and ether serve as "a vehicle for money laundering, tax evasion and the like"
  • Digital currencies issued by central banks will make transactions more efficient while cryptocurrencies serve as a vehicle for illicit activity, economist Barry Eichengreen told CNBC Monday.

    Asked whether he thought cryptocurrencies like bitcoin and ether would play a major role in the economy, he said: "Not really."

    "I think there is a role for central bank-issued digital currencies which are a very different thing than crypto, anonymous currencies," he said.

    "The first alternative central bank digital currencies will make transactions more efficient. The second one is a vehicle for money laundering, tax evasion and the like."

    Cryptocurrencies have come under fire from a number of economists, regulators and banking executives in recent weeks.

    Harvard economist Kenneth Rogoff made a prediction that the price of bitcoin would "collapse" under continued pressure from governments.

    Last month, China's regulators moved to ban initial coin offerings (ICOs) that allow start-ups to raise funds by flogging off new cryptocurrencies. The price of the virtual asset dipped significantly following the ban.

    JPMorgan CEO Jamie Dimon has called bitcoin a "fraud" that will eventually "blow up." Earlier this month, the investment banker said he would refrain from commenting on bitcoin, only to scrutinize it again the next day.