Most banks are not too keen on cryptocurrencies right now. Some even prevent customers from buying this new form of money altogether. The Bank for International Settlements has taken an aggressive stance as well. They now warn central banks to not develop their own digital currencies.
It is evident central bank-issued digital currencies are quite interesting. Any financial institutions developing their own currency can make a big impact. One lingering question is whether or not such currencies should be made accessible to the public. Right now, that does not appear to be the case. If the Bank for International Settlements is to be believed, that will never happen either. They warn all central banks not to go down this path.
Bank for International Settlements is Firm
It is a rather intriguing turn of events. Bank-developed digital currencies offer a lot of promise and total control. Especially when compared to cryptocurrencies, a bank-issued currency seems more favorable. At the same time, none of those efforts have turned into a working product. It seems that situation will not come to change anytime soon.
BIS Committee chair Benoit Coeure comments:
“Central bank digital currencies could help make settling trades of securities and foreign exchange more efficient in the future. But more work and experimentation would be needed to explore these benefits. General purpose central bank digital currencies could revolutionize the way money is provided and the role of central banks in the financial system, but these are uncharted waters, with potential risks. This report is a starting point for further discussion and research and will help countries make choices given their own circumstances.”
This stance by the Bank for International Settlements paints an intriguing future. While they can’t forbid central banks from issuing digital currencies, it is evident the business model is very controversial. Several banks are already looking into this concept as we speak. For now, it remains to be seen if these comments fall on deaf ears. Rest assured this is not the last we hear of central bank-issued digital currencies.
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