Central bank digital currencies may not replace crypto, BIS says

Central banks are fighting with Stablecoin’s private businesses to control digital money and protect consumers, a global organization for policy makers said.

The Bank for International Settlements said private digital assets could co-exist with potential digital currencies operated by central banks. Report On thursday. He added that the central bank version would rely on banks and other financial institutions to generate credit and act as intermediaries to protect financial stability.

This treatise reflects growing anxiety among policy makers that private sector initiatives on the rapid growth and payments of cryptocurrencies could lead to the loss of central bank cash control.

This study is the second report from BIS on central bank-backed digital currencies, partly in an effort by state authorities to combat threats to their role. This report is up-to-date on the basic principles of central bank digital currencies set by a group of seven central banks last October. The latest findings are from the same group, including central banks in the US, EU, UK and Japan.

“The central banks contributing to this report have already identified that as the financial system evolves, it may be an important tool for CBDC to continue to achieve its public policy objectives. We have identified, “the study states.

Stablecoins claims to be a crypto token unique to blockchain technology, usually backed by one-on-one with traditional assets such as dollar debt. They provide a relatively easy way for cryptocurrency traders to get in and out of coins such as Bitcoin and Ethereum, and are often a potential crypto-based alternative to traditional currencies such as the dollar as a means of payment. It is being advertised.

According to the specialized website CoinGecko, the fast-growing stablecoins (the largest are tethers and US dollar coins) are worth about $ 130 billion. In a global context, it is a small part of the financial system.

Nevertheless, rating agency Fitch warning In July, stablecoin operators could cause an epidemic in the credit market if they were forced to cancel their reserves for any reason. International regulators will announce minimum standards for private stablecoin in the coming weeks.

The BIS report found that significant adoption of stablecoin could lead to fragmentation and “excessive market power.”

The newspaper acknowledged that there are also risks associated with central bank-backed alternatives, but because private initiatives are incompatible with other forms of funding and lack the protection associated with national currencies. “The public interest is low,” he said. ..

“The central bank is responsible for giving citizens access to the safest form of money in the digital age, the central bank’s money,” said Christine of the ECB, chair of the Central Bank Governor’s Group in charge of the report. Lagarde said.

The efforts of central banks around the world to create digital currencies are uneven. China, Sweden and the Bahamas are in the advanced stages, but key policy makers in Europe and the United States have only promised to explore their own launch possibilities. The latest BIS survey summarizes the principles and design ideas that seven central banks find desirable.

The study suggests that policy makers want the digital money version to outperform private placements because of its range and capabilities to fit existing systems and financial infrastructure.

The latest recommendations suggest that central bank digital currencies rely on commercial banks to generate consumer credit. The report suggests that all credits created by the central bank will be recycled to the payment system.

Separately, Isda, a trading agency in the derivatives industry, said Thursday that it would set up a working group to prepare legal documents for trading derivatives in digital assets. The organization’s base contracts support trillions of dollars worth of derivative contracts around the world.

Central bank digital currencies may not replace crypto, BIS says Source link Central bank digital currencies may not replace crypto, BIS says

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