Alejandro Díaz de León, the head of the Mexican central bank, expresses considerable doubts about the suitability of Bitcoin (BTC) as an official means of payment, whereby he sees the volatility of the cryptocurrency as the greatest obstacle.
In an interview with Reuters, Díaz de León said that in today’s financial system, Bitcoin has a “similar position to precious metals” compared to local currencies.
While the small Central American country El Salvador recently made the market-leading cryptocurrency official currency, Mexico’s central bank chief does not want to do the same as its southern “neighbor”, because Bitcoin sees it more as a medium of exchange:
“In our opinion, the exchange of Bitcoin for a product or service is more of a kind of bartering, in which a good is exchanged for a good, than a real payment process, in which money is exchanged for a good.”
In addition, Díaz de León emphasizes the risk of volatility or exchange rate fluctuations associated with cryptocurrencies. Ironically, the government of El Salvador recently took advantage of this, because just one day after Bitcoin was recognized as a means of payment, the country bought the first 200 BTCs valued at $ 10.4 million.
President Nayib Bukele then seized the opportunity when the crypto market leader’s rate suddenly collapsed on Tuesday to buy more Bitcoin at a low price and to expand ownership of El Salvador to 550 BTC. According to the head of government, this strategy should have saved at least “one million in paper money”.
The governor of the Mexican central bank points out, however, that the processing of payments requires a certain stability of value, because “the population does not want the purchasing power of their income to fluctuate by 10% up or down from one day to the next “. Such a volatility in the purchasing power of a currency would be undesirable, which is why Bitcoin would also not be suitable as a “store of value”.