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Crypto can be ignored but not big tech, says Denmark’s central bank

Lars Rohde, governor of the country’s central bank Danmarks Nationalbank, does not see crypto as an economic threat but is more concerned if big tech's entry into payments, which could erode the central bank's autonomy.

Danmarks Nationalbank, Copenhagen / Image by: Wikimedia Commons

Fri, 28 May 2021, 02:34 am UTC

Governments and monetary authorities in most countries are trying to come up with an appropriate regulatory framework to counter what they see as potential risks posed by the rising usage and trading of cryptos. However, Denmark is among those few countries that are not that much bothered by crypto’s rise as it does not view digital assets as a threat to its economy.

This was the stance given by Lars Rohde, governor of the country’s central bank Danmarks Nationalbank, in a recent interview with Bloomberg. The central banker gave his thoughts on a variety of topics including cryptocurrencies, housing, and inequality.

During the interview, Rohde was asked if he thinks that cryptos post a serious economic threat to the country’s economy and if they are something that central banks should take seriously. “Well I could be tempted to ignore it,” the Danmarks Nationalbank governor replied.

In fact, he believes that calling crypto digital currency is a misnomer. He pointed out its price volatility and lack of central bank backing that he is more inclined to call it a speculative asset.

“I think the term currency is badly used here,” Rohde explained. “Most currencies store value or means of transactions. There is no stability, no guarantee from any about the value of cryptocurrencies. So it is a very speculative asset at best.”

He was then asked if central banks need to take action to reduce the rivalry from crypto. “At present no, I don’t think that is an issue,” Rohde replied.

However, he admitted that he is more concerned if major tech firms move into the payments area. If that happens, the central bank governor believes that it could potentially pose a threat to the banking system.

“What’s more interesting is if big tech invades the currency area or the transaction means,” Rohde explained. “That could be very interesting and maybe also a real threat to the autonomy and independence of central banks.”

Denmark is among the first countries to explore the possibility of issuing its own central bank digital currency, according to Cointelegraph. The Danmarks Nationalbank did a one-year study from 2016 to 2017 then decided that a CBDC would do little to improve the country’s financial system.

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