ADVERTISEMENT
Advertise with BNC

Bank of International settlements warns against central bank cryptos

The Bank of International Settlements (BIS) - or the central banks’ central bank - has warned global central banks they could endanger the stability of the financial system if they create their own digital currency in a bid to quash competition from established cryptocurrencies like Bitcoin and Ethereum.

The Bank of International Settlements (BIS) – or the central banks’ central bank – has warned global central banks they could endanger the stability of the financial system if they create their own digital currency in a bid to quash competition from established cryptocurrencies like Bitcoin and Ethereum.

In its Committee on Payments and Market Infrastructures report, which looked at the potential of central bank digital currencies (CBDCs), it concluded that such a creation “would allow for [public] ‘digital runs’ toward the central bank with unprecedented speed and scale.”

The report comes ahead of the Group of 20 meeting in Buenos Aires  later this month which will set about addressing the issue of Bitcoin and cryptocurrency regulations.

Central banks lend digital currency only to retail banks and to the public in notes and coins so an unofficial fast-transacting cryptocurrency is a looming threat to the monopoly central banks have on the supply and creation of money. Arguably the Bank of International Settlements could also take this same view of a CBDC as a threat to its own liquidity providing function if an economy was to go completely cashless.

It was only last month that Agustin Carsten, BIS’ general manager, labelled Bitcoin “a combination of a bubble, a Ponzi scheme and an environmental disaster.”

As cash has continued to drain out of societies as a method of payment, many central banks (including the world’s oldest – Sweden’s Riksbank and the Swiss National Bank), have investigated creating a digital currency of their own. Instead of adopting blockchain technology for their own cryptocurrencies, however, the BIS suggests central banks should instead concentrate on improving the current payment infrastructure.

Benoît Cœuré, who chairs the BIS’s committee on payments and market infrastructures and is a member of the European Central Bank’s executive board told the Financial Times, “Efficient private payment solutions are already in place. “The best way for central banks to face the challenge is to make our existing payment systems faster and cheaper and also cross-border.”

Follow @AndrewBNC


ADVERTISE WITH BRAVE NEW COIN

BNC AdvertisingPlanning your 2024 crypto-media spend? Brave New Coin’s combined website, podcast, newsletters and YouTube channel deliver over 500,000 brand impressions a month to engaged crypto fans worldwide.
Don’t miss out – Find out more today


ADVERTISEMENT
Advertise with BNC
ADVERTISEMENT
Advertise with BNC
BNC Newsletters: A weekly digest of the most important news and analysis.
ADVERTISEMENT
Advertise with BNC
Submit an event on bravenewcoin.com
Latest Insights More
ADVERTISEMENT
Advertise with BNC