Unbacked cryptos lack intrinsic value and have no backing reserves or price stabilisation mechanisms. [17] This makes them inherently highly volatile and unsuitable as a means of payment. Bitcoin, for instance, exhibits volatility levels up to four times higher than stocks, or gold (Chart 2). Chart 2 Price volatility of cryptos compared with other assets (annualised seven-day rolling standard deviation of daily percentage changes of prices)  Sources: CryptoCompare, Bloomberg, Refinitiv and ECB calculations. Notes: The data are for the period from 1 January 2015 to 15 June 2023. For visibility reasons, the maximum of the yaxis for Chart 2, panel b is set to 5. Nevertheless, on 30 and 31 January 2021 the price volatility of DOGE exceeded 28. Oil data refer to the European Brent Spot price. The altcoins’ names are abbreviated as follows: Bitcoin (BTC), Ether (ETH), Polkadot (DOT), Ripple (XRP), Cardano (ADA), Litecoin (LTC), Chainlink (LINK), Dogecoin (DOGE), Binance Coin (BNB), Bitcoin Cash (BCH), Uniswap (UNI), Solana (SOL). Such high volatility also means that households cannot rely on crypto-assets as a store of value to smooth their consumption over time. Similarly, firms cannot rely on crypto-assets as a unit of account for the calculation of prices or for their balance sheet. Moreover, unbacked cryptos do not improve our capacity to hedge against inflation. Indeed, their price developments exhibit an increasing correlation with stock markets (Chart 3). And empirical analysis finds that momentum in the crypto-asset market and global financial market volatility do have an impact on bitcoin trading against fiat currencies.

Abdul Rasheed Ghaffour: Opening remarks – Forum on Central Bank Foreign Currency Operations Opening remarks by Mr Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the OSSP-BNM-SEACEN Forum on Central Bank Foreign Currency Operations, Kuala Lumpur, 6 August 2020. * * * It is my great pleasure to welcome all participants to the OSSP-BNM-SEACEN Forum on Central Bank Foreign Currency Operations. My appreciation also goes out to OSSP and SEACEN Centre for organising this forum. Although we have been looking forward to hosting all delegates and speakers in Kuala Lumpur, I am glad that technology has enabled us to come together regardless of this challenging time. I believe this forum is timely, given the myriad of issues associated with the current global landscape and the evolving environment for cross-border payment operations. The COVID-19 pandemic has caused widespread disruption within an inconceivably short period. We see disruptions in the lives and livelihoods of families and individuals; in the way work is done and trade conducted; and in our perspective of the world and our solutions to its problems. In at least one area we see the pandemic accelerate a growing trend both domestically and internationally – in digital trade and e-commerce. Retail purchases have more than halved year-on-year, and this gap is quickly filled by the rapid growth of e-commerce. This digitalisation trend is likely to continue post-pandemic with new norms in day-to-day domestic as well as cross-border economic activities.