The President of the European Central Bank, Christine Lagarde, recently called cryptocurrencies “based on nothing” and said he is concerned about people “who don’t understand the risks, who will lose everything and be terribly disappointed, so I think that should be regulated.” This comes at a time when the cryptocurrency market is down more than 50% and investors have lost billions of dollars in a matter of hours. Governments around the world are trying to deal with cryptocurrencies, either by imposing restrictions or making them legal tender like El Salvador. However, Lagarde is not the only one who believes that cryptocurrencies are worthless. Several other major economists have previously taken aim and continue to take aim at cryptocurrencies. Here we list some of the most popular comments made about cryptocurrencies by leading economists.
Ken Rogoff, former chief economist at the International Monetary Fund (IMF) in February 2021, said that central banks will not allow Bitcoin and other cryptocurrencies to become mainstream. “Eventually, in the long course of history, government first regulates and then appropriates, and I think we can see that happening here,” he told CNBC TV18. Rogoff has called for an outright ban on cryptocurrencies, calling Bitcoin a money laundering and tax evasion tool. He believes that cryptocurrencies are a bubble, which will eventually burst.
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Nobel Prize-winning economist Paul Krugman is also not a fan of cryptocurrencies. In an opinion piece written for the New York Times, he argues that crypto investors are being sold speculative financial products without making them understand the risks involved. Krugman also delivered an ominous warning about the volatile cryptocurrency market, comparing it to the subprime mortgage crisis of the late 2000s. It’s worth noting that Krugman has previously linked cryptocurrency to a Ponzi scheme.
Another Nobel Prize-winning economist, Joseph Stiglitz, believes that cryptocurrencies should be shut down. He is concerned that cryptocurrencies promote illegal activities by making transactions anonymous. While he sees value in digital payment systems and supports the electronic use of government-backed currencies, he refuses to accept cryptocurrencies as a mode of payment. “I have been a big advocate of moving to an electronic payment mechanism. There are many efficiencies. I think we can have a better regulated economy if we had all the data in real time, knowing what people are spending,” he told CNBC 18. The Nobel laureate reiterated that regulations will only make Bitcoin useless. “My feeling is that when you regulate it so that you can’t engage in money laundering and all these other crimes, there will be no demand for bitcoin,” he told Bloomberg in January 2021. “By regulating the abuses, you’re going to regulate outside of existence. It exists because of abuse.”
Tyler Cowen is a popular economist who was also named one of The Economist’s 36 Most Influential Economists over the last decade. And he is in favor of cryptocurrencies. In an interview with TechCrunch, he said that although he started out as a crypto skeptic, over time he can see legitimate use cases with great benefits. “And I think there is a very good chance that they will be successful and I am impressed by the sheer amount of talent in crypto work or the crypto movement.”
The chief economist of the International Monetary Fund (IMF), Gita Gopinath 2021, strongly defended the regulation of cryptocurrencies, saying that it will always be a challenge to ban them, since they operate from offshore exchanges. She also suggested a global policy and coordinated action to regulate cryptocurrencies. “I think cryptocurrencies are a particular challenge for emerging markets. It seems to be more attractive to adopt cryptocurrencies and assets in emerging economies than in advanced economies,” she said as reported by PTI.