European Central Bank President Christine Lagarde recently called cryptocurrencies “based on nothing” and said she is concerned about people “who have no understanding of the risks, who will lose it all and who will be terribly disappointed, which is why I believe that that should be regulated.”
This comes at a time when the crypto market tumbled by more than 50 per cent and investors lost billions of dollars in a matter of few hours. The world governments are trying to grapple with crypto, either by imposing restrictions or by making it a legal tender like El Salvador. However, Lagarde is not alone in believing that crypto is worthless. Several other top economists have previously and continue to target crypto. Here we list some of the most popular comments made on crypto by top economists.
Ken Rogoff, former chief economist at the International Monetary Fund (IMF) in February 2021 said that central banks won’t allow Bitcoin and other cryptocurrencies to become mainstream. “Eventually over the long course of history, the government first regulates and then it appropriates, and I think we can see that happening here,” he told CNBC TV18.
Rogoff has called out for a complete ban on cryptocurrencies calling Bitcoin a money laundering and tax evasion tool. He believes that crypto is a bubble, which will eventually burst.
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Nobel Prize-winning economist Paul Krugman is no fan of cryptocurrency either. In an opinion piece written for New York Times, he argues that crypto investors are being sold speculative financial products without making them understand the risks involved. Krugman also gave an ominous warning about the volatile cryptocurrency market, comparing it to the subprime mortgage crisis of the late 2000s. It’s worth noting Krugman has previously linked the cryptocurrency to a Ponzi scheme.
Another Nobel-Prize winning economist Joseph Stiglitz believes cryptocurrencies should be shut down. He worries that cryptos promote illegal activity by making transactions anonymous. While he sees the value in digital payments systems and supports the electronic use of government-backed currencies but refuses to accept crypto as a mode for payment. “I’ve been a great advocate of moving to an electronic payments mechanism. There are a lot of 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 when you regulate it so you couldn’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 are going to regulate it out of existence. It exists because of the abuses.”
Tyler Cowen is a popular economist also named one of the Economist’s top 36 economists who were most influential over the past decade. And he’s pro-cryptocurrency. In an interview with TechCrunch, he said while he started as a crypto sceptic but over time he can see legitimate use cases with high benefits. “And I think there’s a good chance they’ll succeed and I’m impressed by the high amount of talent in crypto work or the crypto movement.”
International Monetary Fund (IMF) Chief Economist Gita Gopinath 2021, made a strong case for regulating cryptocurrencies, saying it will always be a challenge to ban them as they operate from offshore exchanges. She also suggested a global policy and coordinated action for regulating 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.