Bank of Spain Governor: Cryptocurrencies Pose 'More Risks Than Benefits'

The head of Spain's central bank believes in blockchain technology, but is far more uneasy about cryptocurrencies.

Banco de Espana governor Luis Maria Linde discussed cryptocurrencies during a recent speech organized by auditing firm Deloitte, saying that they "present more risks than benefits." That being said, Linde believes that blockchain technology in general may improve efficiency and reduce costs, according to a local news report.

In his speech, Linde stated:

"[Cryptocurrencies] have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerabilities and have been related to fraudulent or illicit activities in many cases."

He referred to crypto tokens as "those spurious novelties that do not provide significant improvements and that should be tackled as soon as possible," during his speech.

Blockchain technology, on the other hand, offers "interesting possibilities" and has the potential to reduce costs, he said. However, he indicated that the technology is "still not quite mature."

More broadly, Linde argued that digitization in the financial sector can signify "great opportunities" to increase the efficiency of financial services and meet users' demand, provided the technologies are "well-used and managed."

That said, he also warned that "the move to a more digital economy is accompanied by greater cyber threats and it is necessary to develop new measures to protect processes, assets and customer data."

In Spain, bitcoin and other cryptocurrencies are not considered as legal tender. The country's finance ministry addressed bitcoin and other cryptocurrencies in an official bulletin published in March. At the time, government officials particularly sought to link the technology to organized crime, thus calling for increased supervision.

Note: Statements in this article have been translated from Spanish.

Banco De Espana image via Shutterstock