BIS believes that the central banks will become obsolete due to crypto, according to Agustin Carstens who is the head of the Bank of International Settlements. He believes that the central banks cannot lose their role as gatekeepers of the entire financial system to cryptos but they are however still afraid.
As per the recent cryptocurrency news, the US authorities claimed they have no plans to create a digital US dollar despite the many reports in the news along with other nations that are looking to float their own sovereign digital currency. In a speech delivered at Princeton University, Carstens explained that private cryptos should not be able to replace the central banks and that the crypto projects are ‘’gleaming skyscrapers’’ while calling the central banks providers of truth.
The BIS believes that the primacy of mainstream finance which is a system that still hasn’t taken into consideration the 1.7 billion adults who remain unbanked while Bitcoin continues to gather greater financial inclusion. Bitcoin is the top cryptocurrency by market cap and has about $1 billion and $3 billion worth of transactions per day. While commentators such as Carstens stick to the primacy to mainstream finance, bitcoin gathers even more attention from the unbanked population.
The BIS chief along with many members from the mainstream banking industry has a history of being anti-crypto. At the start of his mandate, Carstens called on regulators to propose stricter laws to govern the virtual currency market. however, Carstens’ remarks contain a high note of urgency missing from the comments back at the start of the year when he stated that there is no urgent need for the central banks to create a sovereign digital currency but that was when Libra still hadn’t published its whitepaper.
Since Libra released its whitepaper, a lot of countries expressed plans to create their own national digital currencies just to try to prevent Libra from succeeding. For Carstens, the central banks should control the narrative of the emerging digital currency space and he even noted:
‘’We have a responsibility to be at the cutting edge of the debate. There is really no choice but to do so, as otherwise events will overtake us.’’
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