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President of the Peruvian Central Bank warns of the risk of investing in cryptocurrencies

The president of the Central Reserve Bank of Peru (BCR), Julio Velarde, spoke about cryptocurrencies in an interview. 

He warned that cryptocurrencies are a danger to the environment due to the high pollution generated by their use.

“The problem with cryptocurrency now is climate change. It is the least environmentally friendly. To keep mining bitcoins consumes the energy of a medium-sized country. They are impressive amounts”, highlighted the head of the BCR in a long dialogue with INFOX. 

Here you can see the video:

The president of the Central Reserve Bank of Peru (BCR), Julio Velarde considers that cryptocurrencies are not a means of payment, but a financial asset.

 In this regard, he said:

“We do not consider it a means of payment, but a highly volatile financial asset and if people buy it is because of its risk.”

Even the validation of transactions seems ineffective to him, because “it consumes a lot of time and resources”.

He considers that cryptocurrencies “have no intrinsic value. At some point people may lose interest in holding it, and then the price can drop to anything.”

Criticism of NFT

Velarde also referred critically to non fungible tokens (NFT).

“They say that the art market, 10% is made with cryptocurrencies, I doubt that; unless they are these things that they are starting to sell: which is this figure, a digital painting, which they assure that it only has one owner. I don’t know how much that will grow or how important that will be, the figure they presented seemed a bit exaggerated to me.”

And he stressed:

“The problem is that there is so much liquidity in the world that there is a desperation to search for any asset. These digital artworks, even though most of them don’t have that much merit and others probably do, are selling for US$ 40,000 or US$ 50,000″.

He further argues that unlike physical works are exclusive and valuable, in his view these virtual objects are not so much:

“They are not the Fabergé eggs that the Russian emperor had, which is a limited quantity and they are beautiful. Here there is not much behind”.

Peru’s digital currency

The bank’s president also confirmed that they are working on a draft to trace the path of a digital currency in Peru. Information about the Central Bank Digital Currency in that South American country had already been advanced in November 2021.

Now, Velarde specified:

“The ‘white paper’ we are finishing it probably in a month or a month and a half to trace the route, which we will have to correct permanently”.

He added that they have a solid team that is in charge of working on this proposal and that, in addition, he will hold meetings with executives from India and the International Monetary Fund (IMF) to get better light on this issue.

“On Tuesday I will have a virtual meeting with a team from the IMF, with whom I have been working for several months, looking at the current payment market conditions in Peru to work on the road map we have to follow,” he said.

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