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Bankers Think They Can Better Bitcoin

Bankers bitcoin

  • More central bankers seriously considering a push into issuing their own digital currency
  • Bank of International Settlements casts doubts on Bitcoin’s ability to act as a currency, even as it praises its underlying technology layer to support central bank’s push to issue their own digital currencies

If you can’t beat’em, join’em and if you can’t join’em then copy’em.

The astounding rally in Bitcoin over the past year and the unprecedented monetary stimulus injected into the economy is forcing central banks to relook the launch of their own digital currencies, even as they are being accused of debasing their own currencies.

In a recent interview with Bloomberg Television, the Bank of International Settlement’s Benoit Coeure suggested that while,

“Bitcoin can be an investment instrument…it has failed the test of being a currency, it has failed the test of being a payment instrument – just because the value is moving around so much.”

But that doesn’t mean that central bankers aren’t keen on leveraging Bitcoin’s core technology, blockchain, with Coeure noting,

“Central banks are focused on an instrument that would provide liquidity, that would provide safety, and that can be used as a commodity in the global payments system.”

“That’s why we want to look into central bank digital currency. Crypto has its place under the sun, but it’s different – it’s not a payment instrument.”

China is in the late stages of issuing its own central bank digital currency, while the European Central Bank is still studying possibilities for its own digital euro.

Meanwhile, the U.S. Federal Reserve is working with the Massachusetts Institute of Technology on studying the practical feasibility of launching its own digital dollar.

In a recent survey by the Bank of International Settlements (“BIS”), as many as 80% of central banks worldwide have either launched their own digital currency, or are actively studying such a move.

And even as Bitcoin’s price continues to be volatile, central banks are looking to make their currency more spendable and increase the volatility of their fiat currencies by digitizing them, whilst unwittingly adding to the argument that Bitcoin can act as a store of value.

At a BIS event on Thursday, European Central Bank President Christine Lagarde said that monetary authorities must keep up with the rapid pace of innovation and that includes digital currencies.

But a move by central banks to issue their own digital currencies creates a fresh set of issues because it raises the question as to where commercial banks sit in the entire equation.

Under current circumstances, central banks sit one step removed from the population as they make loans available to commercial banks, who then layer a premium on those loans to the money that they ultimately lend out.

If the central bank issues its own digital currency, depositors will have a direct relationship with the central bank and cut out the middleman altogether, raising questions as to whether or not the central bank is in the right place to be dishing out loans and managing retail clients.

Nonetheless, the digital currency genie is already out of the bottle and while central banks might run their own digital currencies on their own blockchains, it will be a far cry from Bitcoin, and the ethos of decentralization that Bitcoin maximalists promote.

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SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in blockchain, crypto, Web3, fintech and technology.

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© Copyright of Novum Global Consultancy Pte Ltd {2020, 2021}. All rights reserved.

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