Digital currencies issued by central banks will make transactions more efficient while cryptocurrencies serve as a vehicle for illicit activity, economist Barry Eichengreen told CNBC Monday.
Asked whether he thought cryptocurrencies like bitcoin and ether would play a major role in the economy, he said: “Not really.”
“I think there is a role for central bank-issued digital currencies which are a very different thing than crypto, anonymous currencies,” he said.
“The first alternative central bank digital currencies will make transactions more efficient. The second one is a vehicle for money laundering, tax evasion and the like.”
Cryptocurrencies have come under fire from a number of economists, regulators and banking executives in recent weeks.
Last month, China’s regulators moved to ban initial coin offerings (ICOs) that allow start-ups to raise funds by flogging off new cryptocurrencies. The price of the virtual asset dipped significantly following the ban.
JPMorgan CEO Jamie Dimon has called bitcoin a “fraud” that will eventually “blow up.” Earlier this month, the investment banker said he would refrain from commenting on bitcoin, only to scrutinize it again the next day.