In The Latest Report, Bank of Finland Calls Digital Currencies as “Fallacy”

Traditional banking institutions have always been one of the topmost critics of cryptocurrencies due to their decentralized mode of operation and also due to their speculative nature and extreme volatile behaviour. In one its latest reports titled “The Great Illusion of Cryptocurrencies,” the Bank of Finland explains the reasons as to why they consider digital currencies to be a “fallacy”.

Aleksi Grym, Adviser on Digitalization and Head of the Digital Central Bank process in the Financial Stability and Statistics Department has written this latest paper which goes to explain that the fundamental nature of cryptocurrencies “shows how poorly understood the concept of money itself still is today” and how the Internet and social media have “muddled our sense of fact and fiction.”

Grym denies recognizing virtual digital currencies as real currencies but instead refers them as “accounting systems for non-existent assets.” He also said that the distributed ledger technologies like the blockchain are pretty much similar to other record-keeping systems but their implementation for digital currencies is “unrelated to the fundamental characteristics of money:”

Grym further added that “For all intents and purposes, that ledger is a centralised ledger. The fact that there are multiple synchronised copies of it, distributed across a network, is irrelevant, as each one has the same data.”

The article also mentions several different studies which have a relatively negative view on Bitcoin and other cryptocurrencies by calling them as absolutely speculative or a bubble with zero intrinsic value. Grim also talked about the idea of having a central bank issued digital currency which would “practically mean bank accounts at the central bank.”

The article also notes cryptocurrency doesn’t fit into the definition of money that is referred to as a unit of exchange or having a store of value. The article also notes that cryptocurrencies are usually lucrative for being in illicit transfer of money for criminal activities or for the thrill of trading.