Blockchain-based digital tokens or cryptocurrencies are “poor imitations of money,” Benoît Cœuré, member of the Executive Board of the European Central Bank (ECB) and chair of the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI), and Jacqueline Loh, chair of the BIS Markets Committee, wrote in an opinion piece on the Financial Times on March 13.

The authors believe that cryptocurrencies are no better than gambling and said that policymakers are rightly worried about consumer and investor abuses, as well as illicit use. However, they consider them as “something of a mirage…an early sign of change.”

“Despite its many faults, bitcoin has put the spotlight on an old failing of our current system: cross-border retail payments…these payment channels are generally much slower, less transparent and way more expensive than domestic ones. Improvements here are the best way of rising to the bitcoin challenge,” Cœuré and Loh wrote.

They further underscored the ongoing debate and efforts on central bank digital currencies (CBDC).

“Under the current system, only financial institutions have direct access to digital central bank money via accounts at their national central bank. A consumer-oriented CBDC would extend that access to everyone. Although this might not seem like a big step to digitally-savvy consumers, it could have far-reaching ramifications for the role of money, the financial system and the economy,” Cœuré and Loh wrote.

The authors further list a number of prerequisites of CBDC. They said that CBDC would have to be as convenient for consumers and businesses to use as cash and it should be hacker-proof.

“If we want to stop illegal use, it should not grant the same anonymity of cash to users. But giving central banks unprecedented amounts of information about individuals is equally controversial. There is no one-size-fits-all solution,” they added.

Referring to a BIS report, Cœuré and Loh said that while CBDCs could potentially help streamline many of the existing clearing and settlement processes that are needed to complete securities and foreign exchange trades, central bank experiments so far have not shown conclusive benefits for wholesale payments and beyond. However, they concluded on a positive note saying that the “technology and design are evolving quickly.”

The opinion from Cœuré and Loh comes just before the meeting of Group of 20 policymakers that will focus on bitcoin and other blockchain-based digital tokens.