JAKARTA - The head of the central bank in Mexico on Thursday, September 9 called bitcoin a high-risk investment and a bad store of value. He also called Bitcoin more like a bartering tool than a paper money revolution.
The comments of the Governor of the Bank of Mexico, Alejandro Diaz de Leon, indicate that Mexico will not follow El Salvador in the near future in adopting digital currencies as legal tender in parallel.
"Anyone who accepts bitcoins in exchange for goods or services, we believe that (the transaction) is more akin to bartering because the person is exchanging goods for goods, but it's not really money for goods," Diaz de Leon said.
"In our time, money has evolved into paper money issued by central banks," he said. "Bitcoin is more like a precious metal dimension than a daily legal tender."
Banxico bosses argue that for cryptocurrency to be considered money, it must be a reliable payment method. He added that bitcoin also needs to maintain its value. Diaz de Leon points out that the value of cryptocurrencies often swings wildly in a single day.
"Society doesn't want their purchasing power, their salaries go up or down 10% from day to day. You don't want that purchasing power volatility. In that sense, it's not a good hedge," he said.
El Salvador's unprecedented adoption of bitcoin as a legal tender earlier this week has been beset by problems that have contributed to the digital currency's rout in value globally.
Bitcoin is known to be very volatile. In April it rose to more than US$64,000 and fell almost as low as US$30,000 also in May. This very high volatility makes Bitcoin very risky.
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