Tuesday, August 16

Central Bank of Paraguay warns about bitcoin and projects its CBDC

Key facts:
  • The BCP stated in a statement that bitcoin is not legal currency and is used for criminal operations.

  • The development of its digital currency is interesting to complement cash and is being studied.

The Central Bank of Paraguay (BCP) issued a statement on Wednesday, December 15, warning the population of that country about the use of bitcoin (BTC) and other cryptocurrencies. Fear, uncertainty and doubt (fear, uncertainty and doubt or FUD) are the emotions that emerge from the message of the Paraguayan body, which is quite similar to others of its style in other countries.

At release, it is clarified that cryptocurrencies are not legal tender in the country and their volatility is highlighted, which makes them “high risk” investments.

Likewise, the text of the highest monetary entity in Paraguay states that “cryptocurrencies, as they are not issued by a Central Bank, do not have legal tender or any cancellation force.” In the national territory, the only valid currency is the guaraní, as detailed in the Organic Law of the BCP.

On the other hand, the BCP also referred to the volatility exhibited by some cryptocurrencies such as bitcoin. In this regard, the bank highlights the fact that the value of a cryptocurrency is based on the trust of the people who use it and in the law of supply and demand. This characteristic, the text concludes, makes them “high risk” investments.

Finally, the BCP also attributes to cryptocurrencies an alleged use for “illicit operations.” This theory is based on the privacy and anonymity that some cryptocurrencies – not all – offer, characteristics that can be used to finance terrorist activities, money laundering or drug trafficking without being easily detected.

However, as CriptoNoticias has reported in the past, the use of cash remains the preferred method for crime-related transactions. In fact, it is a way that allows greater privacy than cryptocurrencies, whose information can be traced on the blockchain at all times, as explained in depth in this article.

With a short text, the Central Bank of Paraguay established its position regarding bitcoin. Source: bcp.gov.py.

Will Paraguay have its CBDC?

In a second part of the statement, the analysis that the BCP carries out to implement its own digital currency in the future is detailed. These instruments are called CBDC, which stands for central bank digital currency, or central bank digital currency.

The main motivation for this to happen is its possible use as a payment method “Without the risks associated with private cryptocurrencies,” the document details. In this sense, it is added that “a digital currency issued by the BCP could provide complementary money to the public, adhering to the development of the national payment system.”

To that end, the organization created the Working Group on Digital Currency of the Central Bank of Paraguay, which also monitors the progress of other central banks in this area.

Other central banks that spread FUD on bitcoin

As well as that of Paraguay in this opportunity, other central banks in Latin America have spoken out against the popularization of cryptocurrencies. To express that dissatisfaction, they all resorted to the same method: a statement that talks about the “risks” of bitcoin and similar cryptocurrencies.

For example, CriptoNoticias has reported on several occasions the notices of the Central Bank of the Argentine Republic on volatility, insecurity and other disadvantages of using bitcoin.

Similarly, the Central Bank of Chile warned in 2019 that cryptocurrencies cannot substitute for fiat money, while in Bolivia it was not the Central Bank but the Bolivian Financial System Authority (ASFI) that was in charge of “taking care” of the citizens of the supposed danger that crypto assets carry.


Leave a Reply

Your email address will not be published.