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Central bank-issued digital currency is the future, not cryptocurrency, economist says

  • Digital currencies issued by central banks will make transactions more efficient, economist Barry Eichengreen told CNBC
  • But he said cryptocurrencies like bitcoin and ether serve as "a vehicle for money laundering, tax evasion and the like"

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.

Harvard economist Kenneth Rogoff made a prediction that the price of bitcoin would "collapse" under continued pressure from governments.

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.