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(Bloomberg) -- Agustin Carstens, who assumes leadership Friday of the Bank for International Settlements, will make digital currencies and financial technology two of his top priorities.
The 59-year-old, who previously served as governor for Mexico’s central bank and also as the nation’s finance minister, termed bitcoin’s surge a development that “should at least raise some eyebrows,” given that it doesn’t have the backing of a state and isn’t legal tender. Bitcoin soared above $11,000 this week, before dropping back below $10,000.
The BIS will devote a lot of resources “to virtual assets, which traditionally are called crypto-currencies, but we don’t believe that they are currencies,” Carstens said in an interview this week in Mexico City.
He’ll also focus the Basel-based institution -- often referred to as the central bank for central banks -- on making payment systems and fintech applications more resilient to cyber attacks, an area where the BIS has “already been making some inroads,” he said.
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Carstens joins a chorus of well-known personalities issuing warnings about bitcoin after its value rose more than 10-fold this year. Credit Suisse Group AG Chief Executive Officer Tidjane Thiam termed it the “very definition of a bubble,” while Societe Generale SA Chairman Lorenzo Bini Smaghi labeled it a “scam.” Nobel prize-winning economist Joseph Stiglitz said bitcoin “ought to be outlawed.”
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Carstens was less categorical than some bitcoin critics, recognizing that the technology behind it may have widespread, practical applications in areas of the financial system.
“We have not only to look at things that might seem not to be very clear, but also to take advantage of some of the innovations issues that virtual assets like Bitcoin have brought,” he said.
Carstens will become general manager at the BIS, replacing Jaime Caruana, who served in the role since April 2009. The organization, founded in 1930, hosts regular meetings of central bankers, publishes statistics and research on matters concerning the global economy and also offers its member institutions financial services.
--With assistance from Catherine Bosley
To contact the reporters on this story: Eric Martin in Mexico City at firstname.lastname@example.org, Carlos Manuel Rodriguez in Mexico City at email@example.com.
To contact the editors responsible for this story: Fergal O'Brien at firstname.lastname@example.org, Frank Connelly, Vivianne Rodrigues
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