- The governor of the Mexican central bank has played down narratives of Bitcoin being the evolved form of currency, terming it as barter trading.
- He further dismissed any chance of Mexico ever accepting BTC to be legal tender as El Salvador has recently done.
Bitcoin is not an evolved currency; in fact, it’s not a currency at all, the head of the Mexican central bank has claimed. BTC is nothing but a poor store of value and a high-risk investment, he added, and Mexico would never recognize it as legal tender.
Alejandro Diaz de Leon, who’s the governor of the Bank of Mexico, downplayed Bitcoin’s significance in the financial world, likening it to barter trading.
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.
This anti-Bitcoin stand is nothing new from Banxico, as the central bank is popularly known. In June, the bank was quick to jointly release a statement with the Ministry of Finance reminding Mexicans that “virtual assets do not constitute legal tender in Mexico nor are they currencies under the current legal framework.”
This was after Ricardo Salinas Pliego, one of the richest men in Mexico, claimed that his bank, Banco Azteca, was working to accept the cryptocurrency.
And as Reuters now reports, the Banxico governor hasn’t changed his mind about BTC, even after it became legal tender in El Salvador.
In our times, money has evolved to be fiat money issued by central banks. Bitcoin is more like a dimension of precious metals than daily legal tender.
“No one wants payment in Bitcoin”
Governor Diaz de Leon criticized Bitcoin’s currency attributes, as many other bankers have done. For any instrument to be considered a currency, it must be a reliable payment method, and Bitcoin is not, he stated. In addition, Bitcoin has been unable to safeguard its value and experiences wild volatility.
People will not want their purchasing power, their salary to go up or down 10% 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.
Despite the bearish sentiments by the governor and the Minister of Finance, Mexico has been adopting cryptocurrencies at a rapid pace. And while for most people globally Bitcoin is a speculative asset, Mexicans have been looking at cryptocurrencies as a way to bypass the tedious and often expensive online payment channels.
Beginning in 2019, the country has made it a mission to crack down on money laundering by imposing stringent standards for capital movement. Ordinary citizens have taken the worst hit as simple transactions now involve a copious amount of processes.
Bitso, the country’s leading exchange, has seen a rapid surge in new users and trading volume. By the end of 2020, Bitso had more than twice the number of users in 35 leading traditional brokerages.