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Bitcoin is barter, not money, Mexico central bank chief says

Bitcoin is barter, not money, Mexico central bank chief says

Mexico's Central Bank Governor Alejandro Diaz de Leon Carrillo speaks during the presentation of the national financial inclusion policy, in the Interactive Museum of Economics (MIDE) in Mexico City, Mexico, on Mar 11, 2020. (Photo: REUTERS/Luisa Gonzalez)

MEXICO CITY: Bitcoin is more like a means of barter than "evolved" fiat money, Mexico's central back chief said on Thursday, calling it a high-risk investment and a poor store of value.

Bank of Mexico Governor Alejandro Diaz de Leon's comments suggest Mexico will not be following El Salvador any time soon in adopting the digital currency as parallel legal tender.

"Whoever receives bitcoin in exchange for a good or service, we believe that (transaction) is more akin to bartering because that person is exchanging a good for a good, but not really money for a good," said Diaz de Leon.

"In our times, money has evolved to be fiat money issued by central banks," he said. "Bitcoin is more like a dimension of precious metals than daily legal tender."

The Banxico boss argued that in order for a cryptocurrency to be considered money it must be a reliable payment method. He added that bitcoin would also need to safeguard its value.

Diaz de Leon pointed out that the value of cryptocurrencies have often swung wildly in a single day.

"People will not want their purchasing power, their salary to go up or down 10 per cent from one day to another. You don't want that volatility for purchasing power. In that sense, it is not a good safeguard of value," he said.

The unprecedented adoption of bitcoin earlier this week as legal tender by El Salvador has been beset by problems that have contributed to a rout in the value of the digital currency globally.

Bitcoin has been notoriously volatile. In April it rose to over US$64,000 and fell almost as low as US$30,000 in May.

It last traded up 2.44 per cent at US$47,179.04.

Source: Reuters

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