- Central banks criticize Bitcoin for threatening their ability to control monetary policy and maintain financial dominance.
- The integration of Bitcoin into global finance is accelerating despite resistance from central authorities.
In recent months, central banks, including the European Central Bank (ECB) and the U.S. Federal Reserve (Fed), have stepped up their criticism of Bitcoin . The underlying concern is that the decentralized cryptocurrency threatens their control over monetary systems, a fact they inadvertently admit in official statements.
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, has notably called Bitcoin
“a useless piece of paper”
and even argued that its existence
“impoverishes”
the financial system. Similarly, voices from the European Central Bank have expressed their concerns over Bitcoin ’s disruptive impact. These comments, while critical on the surface, reveal the growing frustration and anxiety within the traditional financial system regarding Bitcoin’s rising prominence.
Central banks view Bitcoin as a challenge to their ability to enforce monetary policy. Historically, they have wielded significant power over economies by regulating money supply and interest rates. This control has allowed them to influence inflation, employment, and overall economic stability. However, Bitcoin , with its decentralized nature and fixed supply, undermines this power, and central bankers are growing increasingly vocal about it.
One of the central issues lies in the inflationary policies pursued by these institutions. For example, between 2020 and 2022, the Fed dramatically expanded the U.S. money supply, increasing it from $4 trillion to $20 trillion. This unprecedented injection of liquidity, combined with rising inflation rates that peaked at 7% in 2021 and 6.5% in 2022, showcased the consequences of unchecked monetary expansion. The ECB followed a similar path, contributing to a reduction in purchasing power for Eurozone residents, with inflation reaching 10.6% by October 2022.
These inflationary policies have worsened economic inequality, as explained by the Cantillon Effect. This concept, rooted in economics, explains how new money introduced into an economy benefits those closest to the source, such as banks and large financial institutions, while leaving average citizens with devalued currency. The result is an uneven distribution of wealth, with the rich getting richer and the poor being left further behind. This is a pattern that has repeated itself over the years in traditional fiat economies, benefiting governments, banks, and privileged institutions.
Bitcoin offers an alternative to this system. Its decentralized structure and fixed supply make it immune to the kind of inflationary manipulation that central banks rely on. Those who adopt Bitcoin early benefit from its appreciating value, but its system inherently resists the same kind of economic distortions caused by fiat currencies.
Despite central banks’ attacks on Bitcoin , it continues to gain acceptance in traditional finance and even within political circles. Its integration into the global financial system is advancing steadily, and this progress occurs without compromising Bitcoin’s core principles. It is no longer the speculative asset it once was; Bitcoin is becoming a permanent feature of the financial landscape.
What truly irks central bankers is that Bitcoin threatens their ability to profit from monetary policy while shifting the burden of inflation onto the public. Bitcoin’s emergence represents a broader shift towards financial autonomy and away from the control of centralized institutions. In short, what central bankers are truly lamenting is their loss of power.
