Bitcoin Is Volatile & Unsuitable for Payments, Says Romania’s Central Bank

Romania’s central bank has reportedly reiterated its stance of warning users about volatility associated with digital currencies like bitcoin.

The Banca Naţională a României (BNR), the central bank of Romania, first warned the public about risks in using digital currencies in 2015.

In an official notice [PDF] at the time, the central bank said that Bitcoin was neither a national nor a foreign currency and that recognizing or accepting bitcoin as payment is not obligated in any manner. The authority also cited risk reports published by the European Central Bank and the European Banking Authority of the time. It would – to be mindful of proceedings – keep track of the way Bitcoin progresses and evolves over time, the notice revealed.

Over three years later, amid an unprecedented rise in the value of bitcoin, Romania’s central bank is not budging from its initial stance. To the contrary, the central institution is more critical than ever of digital currencies.

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According to Romanian business publication Profit.ro, the central bank has moved to send official documents to banking and financial institutions in the country following bitcoin’s rise in popularity.Excerpts from the documents, roughly translated, read:

The National Bank of Romania maintains its previously communicated views and continues to warn users of virtual currency risks that they face. Virtual currencies have a very high volatility and a low security relative to currencies issued by central banks and regulated transparent electronic currencies. Virtual currency holders have no guarantee that it can be used for buying goods and services in the future as legal tender.

The Bucharest-based central bank also contends that the anonymity of cryptocurrency adopters has seen their coins used to finance terrorist activities.

For clarity, there is no evidence to show that bitcoin has been used in the financing of terrorism. A 2016 Europol report claimed: “Despite third party reporting suggesting the use of anonymous currencies like Bitcoin by terrorists to finance their activities, this has not been confirmed by law enforcement.”

Romania’s central bank dismissively added:

Virtual currencies are not suitable for use in payments, but rather as a means of investment or speculation.

Featured image from Shutterstock.