Romania’s Central Bank Official: Cryptocurrencies Will Never Substitute Fiat Currency

“Cryptocurrencies will never be able to substitute the currency issued by a central bank,” said Daniel Daianu, a member of the Romanian National Bank’s (BNR) Administration Council, in a conference on April 16. As many of his traditional banking peers and clearly being on the side of opposing cryptocurrencies, he further added that central banks may issue their own digital currencies but they will be only seen as any other financial asset and nothing else.

Daniel Daianu isn’t the only central bank official who has previously opposed or discouraged blockchain and cryptocurrency adoption. Agustin Carstens, general manager at the Bank for International Settlements has also labeled Bitcoin as Ponzi scheme and environmental disaster. While Daianu didn’t go that far, it can’t be ignored that central bankers are feeling that they lose their financial grip and consequently attempt to staunchly hold onto their jobs.

During the conference, Daianu also stated:

“We must be aware of the difference between institutions and the roles they have. It is important for these roles not to disappear. Of course, technologies ensure business models and they have always done so. The segmentation of markets has been done for decades, and fintech helps business.”

Expressing his opinion and distinguishing between cryptocurrency and fiat money, he further elaborated that cryptocurrencies are financial assets and nothing else, and they won’t be able to replace the important role that central banks and fiat money play; central banks will always have a role to play in society, he argued. He went on further to defend the state’s role as the only possible last-resort lender in issuing currency, stating:

“What can happen is for central banks to have a digital currency, but that will also be issued by the bank, and commercial banks will receive digital currency that can multiply.”

According to him, during the financial crisis, only state-run central banks can save the economy, and not cryptocurrencies.

The BNR official has even expressed his thoughts on the Romanian capital market and said that the Romanian market is sluggish and weak in terms of listed companies and the number of transactions. He said:

“We have a weak capital market, not just due to the transaction volume, but also in terms of the number of listed companies.”

Comparing the financial market of European countries including the UK and US with Romania, he said that 80 percent of transactions with derivatives go through the London market. Talking about the benefits of the capital markets including of course the stock market he commented that these markets are the key pillars of the economy and play a significant role in the growth of companies. “I think that the Financial Supervision Authority must continue to fight for the development of the local capital market,” he concluded.